What does the slope of the supply of loanable funds curve represent?
A) the positive relation between the real interest rate and investment
B) the positive relation between the real interest rate and saving
C) the negative relation between the real interest rate and investment
D) the negative relation between the real interest rate and saving

Question

Quizplus · Accepted Answer

The slope of the supply of loanable funds curve represents the positive relation between the real interest rate and saving. As the real interest rate increases, people and businesses are more willing to save and lend their money, leading to an increase in the supply of loanable funds. This is reflected by a positively sloping curve where the quantity of loanable funds supplied increases as the real interest rate increases.

What Does the Slope of the Supply of Loanable Funds