If the real interest rate falls, there is
A) an upward movement along the demand for loanable funds curve.
B) a downward movement along the demand for loanable funds curve.
C) a rightward shift of the demand for loanable funds curve.
D) a leftward shift of the demand for loanable funds curve.
E) a leftward shift of the supply of loanable funds curve.

Question

Quizplus · Accepted Answer

A fall in the real interest rate makes borrowing cheaper, leading to an increase in the quantity of loanable funds demanded, resulting in a downward movement along the demand curve.

If the Real Interest Rate Falls, There Is