If firms are anticipating that the profitability of new investments will be lower in the future, then the ________ curve for loanable funds will shift to the ________.

Question

Quizplus · Accepted Answer

When firms anticipate lower profitability from new investments, they are less likely to borrow money for these investments, leading to a decrease in the demand for loanable funds, which is represented by a leftward shift of the demand curve.

If Firms Are Anticipating That the Profitability of New Investments