If technological change increases the profitability of new investment for firms,then the ________ curve for loanable funds will shift to the ________ and the equilibrium real interest rate will ________.
A)supply; right; fall
B)supply; left; rise
C)demand; right; rise
D)demand; left; fall

Question

Quizplus · Accepted Answer

When technological change increases the profitability of new investments, firms are more inclined to borrow funds for investment, increasing the demand for loanable funds. This shifts the demand curve to the right, and as a result, the equilibrium real interest rate rises due to higher demand.

If Technological Change Increases the Profitability of New Investment for Firms,then