Figure 13-4.On the horizontal axis of the graph,L represents the quantity of loanable funds in billions of dollars.
-Refer to Figure 13-4.Which of the following events could explain a shift of the demand-for-loanable-funds curve from to ?

Question

Figure 13-4.On the horizontal axis of the graph,L represents the quantity of loanable funds in billions of dollars. 
-Refer to Figure 13-4.Which of the following events could explain a shift of the demand-for-loanable-funds curve from  to  ?

Quizplus · Accepted Answer

A shift in the demand-for-loanable-funds curve from DLF1 to DLF2 indicates an increase in demand for loanable funds, which could be caused by reform of the tax code to encourage greater investment. This would stimulate more borrowing by investors, leading to an increase in the demand for loanable funds. Option A, reform of the tax code to encourage greater saving, would shift the supply-for-loanable-funds curve, not the demand curve. Options C and D are both related to government budgetary policy, which would affect the supply-for-loanable-funds curve, not the demand curve.