Wednesday, February 17, 2016

"When there is a shortage of loanable funds, the real interest rate will increase." Explain whether the previous statement is correct or not.



"When there is a shortage of loanable funds, the real interest rate will increase." Explain whether the previous statement is correct or not.

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  1. Rully MangunsongFebruary 17, 2016 at 8:06 AM

    Answer: The statement is correct. The shortage of loanable funds means that there are firms and others attempting to obtain loans who cannot do so. As a result, the real interest rate rises until equilibrium is attained.

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