If there is a surplus in the market for loanable funds,the resulting change in the real interest rate
A)reduces both the quantity of loanable funds supplied and the quantity of loanable funds demanded.
B)reduces the quantity of loanable funds supplied and raises the quantity of loanable funds demanded
C)raises both the quantity of loanable funds supplied and the quantity of loanable funds demanded.
D)raises the quantity of loanable funds supplied and reduces the quantity of loanable funds demanded.

Question

Quizplus · Accepted Answer

A surplus in the market for loanable funds means that the supply of funds exceeds the demand at the current interest rate. To eliminate the surplus, the real interest rate will decrease, which will reduce the quantity of loanable funds supplied and increase the quantity of loanable funds demanded.

If There Is a Surplus in the Market for Loanable