In a business cycle recession, which of the following occurs?
A) Investment demand increases and the demand for loanable funds curve shifts rightward.
B) Investment demand decreases and the demand for loanable funds curve shifts leftward.
C) The quantity of investment demanded increases and there is a movement down along the demand for loanable funds curve but no shift in the curve.
D) The quantity of investment demanded decreases increases and there is a movement up along the demand for loanable funds curve but no shift in the curve.
E) The quantity of investment demanded decreases and there is a rightward shift of the demand for loanable funds curve.

Question

Quizplus · Accepted Answer

In a business cycle recession, there is a decrease in overall economic activity, including investment demand. This results in a decrease in demand for loanable funds, causing the demand for loanable funds curve to shift leftward.

In a Business Cycle Recession, Which of the Following Occurs