-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF₀. What happens if the interest rate rises? A) The supply of loanable funds curve shifts leftward to a curve such as SLF₁. B) There is a movement to a point such as b on supply of loanable funds curve SLF₀. C) The supply of loanable funds curve shifts rightward to a curve such as SLF₂. D) none of the above

Question

Quizplus · Accepted Answer

When the interest rate rises, there is typically a movement along the supply curve of loanable funds, not a shift of the curve itself. This movement is to a higher point on the same curve, indicating an increase in the quantity of loanable funds supplied.

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