Multiple Choice
Refer to the market for loanable funds, as shown in the graph. Suppose investors who borrow money in the loanable funds market become nervous and pessimistic about the economy in general, and expected returns on investments in particular. We would expect to see a(n)
A) lower equilibrium interest rate.
B) rightward shift of the supply curve.
C) rightward shift of the demand curve.
D) increase in the equilibrium quantity of loanable funds.
Correct Answer:
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