If the real interest rate increases from 3 percent to 5 percent
A) the nominal interest rate will also increase.
B) the demand for loanable funds curve will shift rightward.
C) there will be a movement up along the demand for loanable funds curve.
D) the supply of loanable funds curve will shift rightward.

Question

Quizplus · Accepted Answer

An increase in the real interest rate results in a movement up along the demand for loanable funds curve, as higher interest rates typically reduce the quantity of loanable funds demanded.

If the Real Interest Rate Increases from 3 Percent to 5