If the real interest rate is below the equilibrium real interest rate
A) lenders will be unable to find borrowers willing to borrow all of the available funds and the real interest rate will fall.
B) borrowers will be unable to borrow all of the funds they want to borrow and the real interest rate will rise.
C) lenders will be unable to find borrowers willing to borrow all of the available funds and the real interest rate will rise.
D) borrowers will be unable to borrow all of the funds they want to borrow and the real interest rate will fall.

Question

Quizplus · Accepted Answer

When the real interest rate is below the equilibrium, demand for loans exceeds the supply, leading to an increase in the real interest rate as lenders can charge more due to higher demand.

If the Real Interest Rate Is Below the Equilibrium Real