-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 whatever.

Question

Quizplus · Accepted Answer

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

-Suppose That the Initial Supply of Loanable Funds Curve Is