Suppose that the initial supply of loanable funds curve is SLF₁.In the figure above,an increase in the real interest rate leads to i.a shift in the supply of loanable funds curve from SLF₁ to SLF₂.
Ii)a shift in the supply of loanable funds curve from SLF₁ to SLF₃.
Iii)a movement along the supply of loanable funds curve SLF₁.
Iv)no change whatsoever.

Question

Quizplus · Accepted Answer

An increase in the real interest rate typically causes a movement along the supply of loanable funds curve, not a shift.

Suppose That the Initial Supply of Loanable Funds Curve Is