-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF₀. What happens if disposable income decreases? A) The supply of loanable funds curve would shift rightward to a curve such as SLF₂. B) Nothing; the economy would remain at point a. C) The supply of loanable funds curve would shift leftward to a curve such as SLF₁. D) There would be a movement to a point such as b on supply of loanable funds curve SLF₀.

Question

Quizplus · Accepted Answer

A decrease in disposable income typically leads to a decrease in savings, which would cause the supply of loanable funds curve to shift leftward.

-In the Above Figure, the Economy Is at Point a on the Initial