An increase in the real interest rate results in a
A) rightward shift in the supply of loanable funds curve.
B) leftward shift in the supply of loanable funds curve.
C) movement along the supply of loanable funds curve.
D) none of the above.

Question

Quizplus · Accepted Answer

An increase in the real interest rate does not shift the supply curve of loanable funds but causes a movement along the supply curve, as suppliers are willing to lend more at higher rates.

An Increase in the Real Interest Rate Results in a