In 2008, the many people became unable to make payments on their mortgages and instead defaulted on them. As a result, the of loanable funds curve shifts and real interest rate .

Question

Quizplus · Accepted Answer

When people default on their mortgages, the supply of loanable funds decreases, shifting the supply curve leftward, which leads to an increase in the real interest rate.

In 2008, the Many People Became Unable to Make Payments