If, at the current interest rate, the quantity of loanable funds supplied is less than the quantity of loanable funds demanded, then

Question

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If the quantity of loanable funds supplied is less than the quantity of loanable funds demanded, there is excess demand for loans. This causes the real interest rate to rise as borrowers compete for a limited supply of funds. This increase in the real interest rate encourages more savers to supply funds, which eventually leads to an increase in the quantity supplied of loanable funds and a decrease in the quantity demanded, eventually reaching equilibrium. Therefore, the supply of loanable funds does not shift, but the real interest rate rises until equilibrium is reached.

If, at the Current Interest Rate, the Quantity of Loanable