Which of the following occurs if the real interest rate falls?
A) The demand for loanable funds increases and the demand for loanable funds curve shifts rightward.
B) The demand for loanable funds decreases and the demand for loanable funds curve shifts leftward.
C) The quantity of loanable funds demanded increases and there is a movement down along the demand for loanable funds curve.
D) The quantity of loanable funds demanded decreases increases and there is a movement up along the demand for loanable funds curve.
E) The quantity of loanable funds demanded increases and the demand for loanable funds curve shifts rightward.

Question

Quizplus · Accepted Answer

When the real interest rate falls, borrowing becomes cheaper, leading to an increase in the quantity of loanable funds demanded, resulting in a movement down along the demand curve, not a shift of the curve itself.

Which of the Following Occurs If the Real Interest Rate