Figure 13-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves.
-Refer to Figure 13-3. Which of the following movements shows the effects of a new law that makes more people than before eligible for Individual Retirement Accounts?

Question

Figure 13-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. 
-Refer to Figure 13-3. Which of the following movements shows the effects of a new law that makes more people than before eligible for Individual Retirement Accounts?

Quizplus · Accepted Answer

The new law that allows more people to be eligible for Individual Retirement Accounts increases the supply of loanable funds, which is shown by a rightward shift of the supply-of-loanable-funds curve from S₁ to S₂. This shift leads to a decrease in interest rates and an increase in the equilibrium quantity of loanable funds. The movement from Point C to Point F represents this new equilibrium.