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

Question

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

Quizplus · Accepted Answer

When the supply of loanable funds curve shifts to the right, the total amount of borrowing will increase, and the interest rate will decrease. This is because the increased supply of funds pushes down the cost of borrowing, resulting in a decrease in the interest rate.

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