-(Exhibit: Loanable Funds and Capital Markets) If in Panel (c) saving increases from S₂ to S₁, then:

Question

Quizplus · Accepted Answer

When saving increases, it leads to a higher supply of loanable funds, which typically lowers the interest rate and increases the quantity of capital demanded, assuming all other factors remain constant. This does not necessarily shift the demand for capital but increases the quantity demanded due to the lower interest rate.

-(Exhibit: Loanable Funds and Capital Markets) If in Panel (C)