An increase in the real interest rate results in a

Name: An increase in the real interest rate results in a
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Question

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An increase in the real interest rate causes a movement along the supply of loanable funds curve because it does not affect the underlying determinants of the supply of loanable funds, such as savings and investment behavior. As the interest rate rises, the quantity of loanable funds supplied will decrease, causing a movement up the supply curve.

An Increase in the Real Interest Rate Results in a