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A decrease in the real interest rate does which of the following?

A decrease in the real interest rate does which of the following?


A.increases the demand for loanable funds

B.decreases private saving

C.decreases consumption spending

D.decreases the demand for loanable funds

Top Answer

A.increases the... View the full answer

1 comment
  • Can you tell me why B is not correct?
    • luiyezheng
    • Aug 06, 2018 at 2:56am

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Other Answers

The solution is... View the full answer

(a) increases the demand... View the full answer

2 comments
  • Can you tell me why B is not correct?
    • luiyezheng
    • Aug 06, 2018 at 2:56am
  • Option (B) is not correct because there is income effect which dominates so people saves more when the interest rate falls.
    • nishantarora18
    • Aug 06, 2018 at 3:04am

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