A rise in the real interest rate
A) creates a movement downward along the demand for loanable funds curve.
B) shifts the demand for loanable funds curve leftward.
C) creates a movement upward along the demand for loanable funds curve.
D) shifts the demand for loanable funds curve rightward.

Question

Quizplus · Accepted Answer

A rise in the real interest rate makes borrowing more expensive, leading to a decrease in the quantity of loanable funds demanded, which is represented by a movement upward along the demand curve.

A Rise in the Real Interest Rate