If disposable income increases, people will decide to saving, the supply of loanable funds will and the real interest rate will .
A) increase; increase; fall.
B) decrease; decrease; rise.
C) decrease; increase; fall.
D) increase; decrease; rise.

Question

Quizplus · Accepted Answer

When disposable income increases, people tend to save more, which increases the supply of loanable funds. As a result, the real interest rate tends to fall due to the increased availability of funds for lending.

If Disposable Income Increases, People Will Decide to Saving, the Supply