A fall in the real interest rate brings a
A) movement up along the supply of loanable funds curve.
B) rightward shift of the demand for loanable funds curve.
C) leftward shift of the supply of loanable funds curve.
D) rightward shift of the supply of loanable funds curve.
E) movement down along the supply of loanable funds curve.

Question

Quizplus · Accepted Answer

A fall in the real interest rate decreases the cost of borrowing, which increases the quantity of loanable funds demanded but does not shift the demand curve itself. It leads to a movement down along the supply of loanable funds curve as suppliers (savers) are less willing to lend out their money at lower interest rates.

A Fall in the Real Interest Rate Brings a