If SA citizens become thriftier, we would expect

Question

Quizplus · Accepted Answer

If SA citizens become thriftier, this means that they are saving more and spending less. As a result, there is an increase in the supply of loanable funds in the SA loanable funds market. This would cause the supply curve to shift to the right, which would decrease the equilibrium real interest rate. This is because the increased supply of loanable funds pushes down the cost of borrowing, resulting in a lower real interest rate.

If SA Citizens Become Thriftier, We Would Expect