Other things the same, a higher interest rate induces people to
A)save more, so the supply of loanable funds slopes upward.
B)save less, so the supply of loanable funds slopes downward.
C)invest more, so the supply of loanable funds slopes upward.
D)invest less, so the supply of loanable funds slopes downward.

Question

Quizplus · Accepted Answer

A higher interest rate makes saving more attractive, leading to an increase in the supply of loanable funds, which is represented by an upward-sloping supply curve.

Other Things the Same, a Higher Interest Rate Induces People