Refer to the figure below to answer the following questions. Figure 7.2.4 -In Figure 7.2.4, the economy is at point A.What happens if the real interest rate rises? A)Nothing; the economy would remain at point A. B)The supply of loanable funds curve becomes steeper. C)The supply of loanable funds curve shifts leftward to a curve such as SLF₁. D)The supply of loanable funds curve shifts rightward to a curve such as SLF₂. E)There is a movement to a point such as B.

Question

Quizplus · Accepted Answer

A rise in the real interest rate would not shift the supply curve of loanable funds but would lead to a movement along the supply curve to a new equilibrium point, such as point B, indicating a change in the quantity of loanable funds supplied and demanded at the new interest rate.

Refer to the Figure Below to Answer the Following Questions