Use the following to answer questions:
-(Figure: The Market for Loanable Funds II) Use Figure: The Market for Loanable Funds II. A decrease in savings by the private sector will shift the supply of loanable funds to the _____ and _____ the interest rate.

Question

Use the following to answer questions: 
-(Figure: The Market for Loanable Funds II) Use Figure: The Market for Loanable Funds II. A decrease in savings by the private sector will shift the supply of loanable funds to the _____ and _____ the interest rate.

Quizplus · Accepted Answer

A decrease in savings by the private sector would reduce the overall supply of loanable funds available in the market. This reduction in supply would shift the supply curve to the left, leading to an increase in the interest rate due to the higher competition for the now scarcer loanable funds.

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