If the real interest rate is below the equilibrium real interest rate,
A) lenders will be unable to find borrowers willing to borrow all of the available funds and the supply of loanable funds curve will shift leftward.
B) borrowers will be unable to borrow all of the funds they want to borrow and the demand for loanable funds curve will shift leftward.
C) borrowers will be unable to borrow all of the funds they want to borrow and the demand for loanable funds curve will shift rightward.
D) a shortage of of loanable funds will cause the real interest rate to rise.

Question

Quizplus · Accepted Answer

When the real interest rate is below the equilibrium, there is excess demand for loanable funds, leading to a shortage, which causes the real interest rate to rise.

If the Real Interest Rate Is Below the Equilibrium Real