Use the following to answer questions:
-(Figure: Crowding Out) Use Figure: Crowding Out. If the supply of loanable funds curve shifts to the right, the result will be a(n) _____ in the total amount of borrowing and a(n) _____ in the interest rate.

Question

Use the following to answer questions: 
-(Figure: Crowding Out) Use Figure: Crowding Out. If the supply of loanable funds curve shifts to the right, the result will be a(n) _____ in the total amount of borrowing and a(n) _____ in the interest rate.

Quizplus · Accepted Answer

When the supply of loanable funds increases (shifts to the right), it typically leads to a decrease in the interest rate because more funds are available for borrowing. Consequently, the lower interest rate encourages more borrowing, leading to an increase in the total amount of borrowing.

Use the Following to Answer Questions