The following figure shows credit demand and credit supply curves.

-Refer to the figure above.It illustrates that ________.

Question

The following figure shows credit demand and credit supply curves.
 
-Refer to the figure above.It illustrates that ________.

Quizplus · Accepted Answer

The graph shows that as the real interest rate increases, the quantity demanded for credit decreases and the quantity supplied for credit increases. Therefore, at higher real interest rates, the quantity demanded for credit is higher than the quantity supplied. This is shown by the gap between the credit demand and credit supply curves. Therefore, the correct answer is C.

The Following Figure Shows Credit Demand and Credit Supply Curves