Use the following to answer questions:
-(Figure: Crowding Out)Use Figure: Crowding Out.If the domestic 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)Use Figure: Crowding Out.If the domestic 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

If the domestic supply of loanable funds curve shifts to the right, there will be an increase in the total amount of borrowing due to the availability of more loanable funds. However, this increase in supply will decrease the interest rates, following the law of demand and supply, which states that an increase in supply will decrease the price (in this case, the interest rate).

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