Use the following to answer questions :
Figure: Crowding Out
-(Figure: Crowding Out) Look at the figure Crowding Out. If the demand for loanable funds curve shifts to the right, the result will be a(n) _____ in the interest rate and a(n) _____ in the total amount of borrowing in the funds market.

Question

Use the following to answer questions :
Figure: Crowding Out 
-(Figure: Crowding Out) Look at the figure Crowding Out. If the demand for loanable funds curve shifts to the right, the result will be a(n) _____ in the interest rate and a(n) _____ in the total amount of borrowing in the funds market.

Quizplus · Accepted Answer

When the demand for loanable funds curve shifts to the right, it means that there is an increase in the demand for loanable funds. This will result in an increase in the interest rate (from i1 to i2) and an increase in the total amount of borrowing in the funds market (from Q1 to Q2). Therefore, the correct choice is (A) increase; increase.

Use the Following to Answer Questions