As the real interest rate increases, the quantity of saving supplied ________ and the quantity of saving demanded ________.
A)increases; increases
B)increases; decreases
C)does not change; does not change
D)decreases; increases

Question

Quizplus · Accepted Answer

As the real interest rate increases, suppliers of funds are more eager to make funds available whereas demanders of funds are less inclined to borrow. These are movements along the respective supply and demand curves.

As the Real Interest Rate Increases, the Quantity of Saving