In 2010, the United States and foreign economies start to recover from the recession. U.S. firms increase their profit expectations. As a result, the demand for loanable funds curve shifts and the real interest rate .

Question

Quizplus · Accepted Answer

As U.S. firms increase their profit expectations, the demand for loanable funds curve shifts to the right, indicating an increase in demand for funds. This causes the real interest rate to increase, as lenders can charge more for the use of their funds due to high demand. Therefore, the correct answer is B, rightward; increases.

In 2010, the United States and Foreign Economies Start to Recover