An increase in the interest rate,other things constant,will:
A)shift the supply of loanable funds curve to the left.
B)shift the supply of loanable funds curve to the right.
C)increase the quantity of loanable funds supplied.
D)shift the demand for loanable funds curve to the left.
E)increase the quantity of loanable funds demanded.

Question

Quizplus · Accepted Answer

An increase in the interest rate, holding other factors constant, makes saving more attractive. This leads to an increase in the quantity of loanable funds supplied as savers are willing to lend more of their money at higher interest rates. This is a movement along the supply curve, not a shift of the curve itself.

An Increase in the Interest Rate,other Things Constant,will