-In the above figure, if the real interest rate is 8, there is
A) a surplus of loanable funds.
B) a shortage in available funds for investment.
C) underproduction in this economy.
D) a shortage of loanable funds.

Question

-In the above figure, if the real interest rate is 8, there is
A) a surplus of loanable funds. 
B) a shortage in available funds for investment. 
C) underproduction in this economy. 
D) a shortage of loanable funds.

Quizplus · Accepted Answer

When the real interest rate is high, such as 8%, it typically leads to a surplus of loanable funds because savers are more willing to lend at higher rates, while borrowers are less inclined to borrow due to the higher cost of borrowing.

-In the Above Figure, If the Real Interest Rate Is