Figure 16.3
-Refer to Figure 16.3.An increase in the supply of loanable funds could result in which of the following combinations of the real interest rate and quantity of loanable funds at a new equilibrium?

Question

Figure 16.3 
-Refer to Figure 16.3.An increase in the supply of loanable funds could result in which of the following combinations of the real interest rate and quantity of loanable funds at a new equilibrium?

Quizplus · Accepted Answer

An increase in the supply of loanable funds would shift the supply curve to the right, leading to a new equilibrium at a lower real interest rate and a higher quantity of loanable funds. The only option that matches this is C, where the real interest rate is 3 per cent (lower than the initial rate of 4 per cent) and the quantity of loanable funds is $150 million (higher than the initial quantity of $120 million).

Figure 16.3 -Refer to Figure 16.3.An Increase in the Supply of Loanable