A fall in the real interest rate
A) results in a movement along the demand for loanable funds curve.
B) shifts the demand for loanable funds curve rightward.
C) shifts the demand for loanable funds curve leftward.
D) has no effect on the demand for loanable funds curve

Question

Quizplus · Accepted Answer

A fall in the real interest rate results in a movement along the demand for loanable funds curve, not a shift of the curve itself. This is because the interest rate is a factor that affects the quantity demanded at each point on the curve, rather than the position of the entire curve.

A Fall in the Real Interest Rate