Technological progress that increases the expected profit shifts the demand for loanable funds curve

Question

Quizplus · Accepted Answer

Technological progress that increases the expected profit will lead to an increase in investment demand, causing the demand for loanable funds curve to shift rightward. This will increase the equilibrium real interest rate as the increased demand for funds pushes up the price of borrowing. Therefore, the correct answer is D, which states that the demand for loanable funds curve shifts rightward and increases the real interest rate.

Technological Progress That Increases the Expected Profit Shifts the Demand