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2 July, 12:43

Assume that initially a country has a loanable funds supply curve of S1. Now, imagine that interest rates across the country increase by 3%. Click on the curve that best represents the loanable funds supply after this increase.

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  1. 2 July, 12:59
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    The loanable funds supply curve (S1) will not shift.

    Explanation:

    When the interest rates change, it is similar to a change in the price of a good. In this case the good is money and the interest rate is its price. A change in the price of a good will result in a change of the quantity supplied along the supply curve, but it will not shift the entire curve, therefore the curve S1 remains the same.
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Home » Business » Assume that initially a country has a loanable funds supply curve of S1. Now, imagine that interest rates across the country increase by 3%. Click on the curve that best represents the loanable funds supply after this increase.
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