Steven Landsburg has suggested that Scrooge, a character invented by Charles Dickens, was not really so bad. What could Landsburg be suggesting would happen in the market for loanable funds if all the misers of the world sold their assets and gave the money to the poor?
A)Supply would shift left, causing investment to fall.
B)Supply would shift right, causing interest rates to rise.
C)Demand would shift left, causing investment to fall.
D)Demand would shift right, causing interest rates to rise.

Question

Quizplus · Accepted Answer

When misers sell their assets and give the money to the poor, they are essentially reducing the amount of money they are saving. This decrease in savings would lead to a leftward shift in the supply of loanable funds, making less money available for borrowing. Consequently, investment would fall due to the reduced availability of funds.

Steven Landsburg Has Suggested That Scrooge, a Character Invented by Charles