Refer to Figure 5.1 for the following questions.
Figure 5.1

-Refer to Figure 5.1. An increase in the supply of loanable funds could result in which of the following combinations of the real interest rate and quantity of loanable funds at a new equilibrium?

Question

Refer to Figure 5.1 for the following questions.
Figure 5.1
 
-Refer to Figure 5.1. An increase in the supply of loanable funds could result in which of the following combinations of the real interest rate and quantity of loanable funds at a new equilibrium?

Quizplus · Accepted Answer

An increase in the supply of loanable funds means that there will be a surplus of loanable funds at the current real interest rate, leading to a decrease in the real interest rate until a new equilibrium is reached where the quantity of loanable funds demanded is equal to the quantity of loanable funds supplied. This will result in a lower real interest rate and a higher quantity of loanable funds. The only option that fits this description is C, where the real interest rate is 3% and the quantity of loanable funds is $150 million.

Refer to Figure 5.1 for the Following Questions