Greater optimism about the expected profits from investment projects
A) causes a movement upward along the demand for loanable funds curve.
B) shifts the demand for loanable funds curve leftward.
C) shifts the demand for loanable funds curve rightward.
D) causes a movement downward along the demand for loanable funds curve.

Question

Quizplus · Accepted Answer

Greater optimism about expected profits from investment projects implies that firms are more willing to invest, leading to an increase in the demand for loanable funds. This in turn shifts the demand curve for loanable funds to the right. Therefore, option C is the correct answer.

Greater Optimism About the Expected Profits from Investment Projects