-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF0. What happens if disposable income decreases?
A)There would be a movement to a point such as b on the supply of loanable funds curve SLF0.
B)Nothing; the economy would remain at point a.
C)The supply of loanable funds curve would shift rightward to a curve such as SLF2.
D)The supply of loanable funds curve would shift leftward to a curve such as SLF1.

Question

-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF0. What happens if disposable income decreases?
A)There would be a movement to a point such as b on the supply of loanable funds curve SLF0. 
B)Nothing; the economy would remain at point a. 
C)The supply of loanable funds curve would shift rightward to a curve such as SLF2. 
D)The supply of loanable funds curve would shift leftward to a curve such as SLF1.

Quizplus · Accepted Answer

A decrease in disposable income would likely lead to a decrease in savings, causing the supply of loanable funds curve to shift leftward.

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