Asked by Cashmere Wilson on May 02, 2024
Verified
The fact that people prefer present consumption to future consumption results in
A) an upsloping supply of loanable funds curve.
B) a downsloping demand for loanable funds curve.
C) a downsloping supply of loanable funds curve.
D) an upsloping demand for loanable funds curve.
Present Consumption
refers to the amount of goods and services consumed by individuals or households at the current time, as opposed to saving for future use.
Loanable Funds Curve
A graphical representation of the market for loanable funds, showing the relationship between the real interest rate and the quantity of loanable funds supplied and demanded.
Future Consumption
The use of goods or services at a later date, often achieved by saving or investing in the present for benefits in the future.
- Identify the factors that cause shifts in the supply and demand for loanable funds.
Verified Answer
FV
Fredelyne VixamaMay 08, 2024
Final Answer :
A
Explanation :
The preference for present consumption over future consumption implies that people require higher interest rates to be willing to save more, thus lending more funds. This results in an upsloping supply of loanable funds curve, as higher interest rates incentivize more savings, increasing the supply of funds available for loans.
Learning Objectives
- Identify the factors that cause shifts in the supply and demand for loanable funds.