The demand for loanable funds curve shows that as the interest rate increases, there will be a curve.
A) nominal; rightward shift in
B) nominal; movement down along
C) real; rightward shift in
D) real; movement up along.

Question

Quizplus · Accepted Answer

The demand for loanable funds curve is a real curve because it shows the relationship between the real interest rate and the quantity of loanable funds demanded. As the interest rate increases, the cost of borrowing increases and firms and individuals will reduce their borrowing, which will lead to a movement up along the demand curve. Therefore, the correct answer is D, real; movement up along.

The Demand for Loanable Funds Curve Shows That as the Interest