Figure 23.2.1

-Refer to Figure 23.2.1. In Figure 23.2.1, the economy is at point A on the initial demand for loanable funds curve DLF₀. What happens if the real interest rate rises?

Question

Figure 23.2.1 -Refer to Figure 23.2.1. In Figure 23.2.1, the economy is at point A on the initial demand for loanable funds curve DLF₀. What happens if the real interest rate rises?

Quizplus · Accepted Answer

When the real interest rate rises, there is a movement along the demand for loanable funds curve, not a shift. Hence, the economy moves to a different point on the same curve, such as point B on DLF₀.

Figure 23.2.1 -Refer to Figure 23.2.1. in Figure 23.2.1, the Economy Is