The principal and interest What is the true definition of Compound interest? Main part amount you are borrowing

states that the real interest rate is determined by the supply and demand for loans.

The loanable funds theory assumes that funds are transferred in a simple way. An economy’s savers and investors meet in a market for loans, where the savers lend to the investors.

Indicate the Incorrect statement of The Loanable Funds Theory:

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  states that the real interest rate is determined by the supply and demand for loans.
  
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  The loanable funds theory assumes that funds are transferred in a simple way. An economy’s savers and investors meet in a market for loans, where the savers lend to the investors.
  
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  Like all economic models, the loanable funds theory simplifies reality.
  
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  The theory assumes only one type of loan and one interest rate;
  
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  The theory also assumes that savers lend directly to investors, which ignores the role of banks
  

When a country’s investors can borrow from abroad, it becomes

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  Funds raised from foreign savers are called capital inflows.
  

Find the true example for Capital outflow:

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  Funds sent abroad are called capital outflows.
  

According to the loanable fund theory how Budget deficit affects Interest rate?

Raise interest rate
Find the correct statement of the Liquidity Preference theory:

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  where interest rates are determined by the supply and demand for money.
  
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  The demand for money is sometimes called liquidity preference.
  
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  In the liquidity preference theory, the key simplifying assumption is that only two kinds of assets exist: money and bonds. All wealth is held in one of these forms. The assets differ in two ways:
  
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