-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF 0 . What happens if disposable income decreases?

A decrease in disposable income typically leads to a decrease in savings, which would cause the supply of loanable funds to decrease, shifting the curve leftward.

-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF 0 . What happens if disposable income decreases?

A decrease in disposable income typically leads to a decrease in savings, which would cause the supply of loanable funds to decrease, shifting the curve leftward.

Solved

-In the Above Figure, the Economy Is at Point a on the Initial

Question 150

Multiple Choice

-In the above figure, the economy is at point a on the initial supply of loanable funds curve SLF₀. What happens if disposable income decreases?

A) Nothing; the economy would remain at point a.
B) The supply of loanable funds curve would shift leftward to a curve such as SLF₁.
C) The supply of loanable funds curve would shift rightward to a curve such as SLF₂.
D) There would be a movement to a point such as b on supply of loanable funds curve SLF₀.

Correct Answer: