Technological progress that increases expected profit shifts the demand for loanable funds curve
A)rightward and decreases the real interest rate.
B)leftward and decreases the real interest rate.
C)rightward and the supply of loanable funds curve leftward.
D)rightward and increases the real interest rate.
E)leftward and increases the real interest rate.

Question

Quizplus · Accepted Answer

Technological progress that increases expected profit shifts the demand for loanable funds curve rightward, which increases the equilibrium real interest rate. This is because businesses will demand more funds to finance their new projects and investments, leading to a higher price (interest rate) to borrow those funds. The supply of loanable funds curve does not shift in this scenario.

Technological Progress That Increases Expected Profit Shifts the Demand for Loanable