Asked by Christopher Roney on May 23, 2024
Verified
Other things the same, a higher real interest rate
A) decreases the quantity of loanable funds supplied.
B) raises domestic investment.
C) raises loanable funds demanded.
D) raises the quantity of loanable funds supplied.
Real Interest Rate
The interest rate adjusted for inflation, reflecting the true cost of borrowing and the real yield to savers.
Loanable Funds
The supply of funds available for borrowing in the financial markets, impacting interest rates.
Quantity Supplied
The amount of a good that sellers are willing and able to sell.
- Investigate how real interest rates affect the practices of saving and investing within a nation.
- Outline the supply and demand interconnections within the loanable funds market of an open economy.
Verified Answer
JP
Jacob PayneMay 29, 2024
Final Answer :
D
Explanation :
A higher real interest rate makes saving more attractive, which increases the quantity of loanable funds supplied as people are more willing to lend their money in exchange for higher returns.
Learning Objectives
- Investigate how real interest rates affect the practices of saving and investing within a nation.
- Outline the supply and demand interconnections within the loanable funds market of an open economy.