Refer to the figure below to answer the following questions. Figure 7.2.4 -In Figure 7.2.4, the economy is at point A.What happens if disposable income decreases? A)Nothing; the economy would remain at point A. B)There is a movement to a point such as B. C)The supply of loanable funds curve becomes downward sloping. D)The supply of loanable funds curve shifts rightward to a curve such as SLF₂. E)The supply of loanable funds curve shifts leftward to a curve such as SLF₁.

Question

Quizplus · Accepted Answer

The supply of loanable funds curve shifts leftward to a curve such as SLF₁.When disposable income decreases, people have less money to save. This reduces the supply of loanable funds, which shifts the supply curve to the left.

Refer to the Figure Below to Answer the Following Questions