An unanticipated decline in the real interest rate in the loanable funds market will cause the
A) aggregate demand curve to shift to the right.
B) aggregate demand curve to shift to the left.
C) long-run aggregate supply curve to shift to the left.
D) natural rate of unemployment to fall.

Question

Quizplus · Accepted Answer

A decrease in the real interest rate in the loanable funds market will encourage borrowing and investment, leading to an increase in aggregate demand. Therefore, the aggregate demand curve will shift to the right.

An Unanticipated Decline in the Real Interest Rate in the Loanable