When the real interest rate rises
A) there is a downward movement along the demand for loanable funds curve.
B) there is an upward movement along the demand for loanable funds curve.
C) the demand for loanable funds curve shifts rightward.
D) the demand for loanable funds curve shifts leftward.

Question

Quizplus · Accepted Answer

When the real interest rate rises, the cost of borrowing increases, leading to a decrease in the quantity of loanable funds demanded, resulting in an upward movement along the demand curve.

When the Real Interest Rate Rises