If disposable income increases,people ________ saving,the supply of loanable funds will ________ and the real interest rate will ________.

Question

Quizplus · Accepted Answer

When disposable income increases, people tend to save more. This increases the supply of loanable funds, which leads to a decrease in the real interest rate. Option A, B, and D are wrong as they suggest that the real interest rate will rise, which is not the case when the supply of loanable funds increases. Option E is also incorrect because the shift in the demand curve for loanable funds is not mentioned in the question.

If Disposable Income Increases,people ________ Saving,the Supply of Loanable Funds