Question

In the long run, the real interest rate is determined by:

A. The exchange rate.

B. The amount of government spending only.

C. The balance between the demand for C, I, and X, and the available supply of goods int he economy.

D. The rate of inflation.

E. A political process

Answer 1

C. The balance between the demand for C, I, and X, and the available supply of goods int he economy.

Explanation: In the long-run, real interest is determined by the fundamental economic factors.