If the real interest rate falls, other things being the same, the quantity of loanable funds demanded ________ and the quantity of loanable funds supplied ________.

Question

Quizplus · Accepted Answer

When the real interest rate falls, borrowing becomes cheaper, leading to an increase in the quantity of loanable funds demanded. Conversely, the lower return on savings discourages saving, leading to a decrease in the quantity of loanable funds supplied.

If the Real Interest Rate Falls, Other Things Being the Same