If the real interest rate is less than the equilibrium real interest rate, there is a _{--------------------}of loanable funds and _{--------------------}. A)shortage; borrowers have an easy time finding the funds they want B)surplus; some borrowers cannot find the funds they want C)surplus; borrowers have an easy time finding the funds they want D)shortage; savers increase their saving supply to restore the equilibrium E)shortage; some borrowers cannot find the funds they want

Question

Quizplus · Accepted Answer

When the real interest rate is below the equilibrium level, there is a shortage of loanable funds because the demand for loans exceeds the supply at that interest rate, making it difficult for some borrowers to find the funds they want.

If the Real Interest Rate Is Less Than the Equilibrium