A decrease in the real interest rate leads to a _______ the demand for loanable funds curve, and a decrease in expected profit leads to a _______ the demand for loanable funds curve.
A)rightward shift of; movement up along
B)movement down along; movement up along
C)movement down along; leftward shift of
D)rightward shift of; leftward shift of
E)movement down along; rightward shift of

Question

Quizplus · Accepted Answer

A decrease in the real interest rate leads to a movement down along the demand for loanable funds curve because borrowers are more willing to borrow at lower interest rates, increasing the quantity demanded of loanable funds. 
A decrease in expected profit leads to a leftward shift of the demand for loanable funds curve because firms are less willing to invest, decreasing the quantity demanded of loanable funds at all interest rates.

A Decrease in the Real Interest Rate Leads to a _______