If people became thriftier and saved more, the loanable funds theory predicts that the equilibrium interest rate would decrease.

Name: If people became thriftier and saved more, the loanable funds theory predicts that the equilibrium interest rate would decrease.
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According to the loanable funds theory, if people save more, the supply of loanable funds increases. When the supply increases while demand remains constant, the price of borrowing (interest rate) decreases to reach a new equilibrium.

If People Became Thriftier and Saved More, the Loanable Funds