-Suppose that the initial supply of loanable funds curve is SLF₁. In the figure above, an increase in the real interest rate leads to
i. a shift in the supply of loanable funds curve from SLF₁ to SLF₂.
ii. a shift in the supply of loanable funds curve from SLF₁ to SLF3.
iii. a movement along the supply of loanable funds curve SLF₁.
iv. no change whatsoever.

Question

-Suppose that the initial supply of loanable funds curve is SLF<sub>1</sub>. In the figure above, an increase in the real interest rate leads to i. a shift in the supply of loanable funds curve from SLF<sub>1</sub> to SLF<sub>2</sub>. ii. a shift in the supply of loanable funds curve from SLF<sub>1</sub> to SLF3. iii. a movement along the supply of loanable funds curve SLF<sub>1</sub>. iv. no change whatsoever. A) i only B) ii only C) iii only D) i and iii E) iv only

Quizplus · Accepted Answer

An increase in the real interest rate does not shift the supply curve of loanable funds but causes a movement along the existing supply curve, indicating a change in the quantity of loanable funds supplied at the new interest rate.

-Suppose That the Initial Supply of Loanable Funds Curve Is