Suppose the market for loanable funds is in equilibrium. If disposable income increases, the equilibrium real interest rate ________ and the equilibrium quantity of loanable funds ________.

Respuesta :

Answer:

Falls; increases

Explanation:

In case there is an increase in the disposable income, the supply of loanable funds will also increase as now people will have more income to save.

This will lead to a rightward shift in the supply curve for loanable funds. As a result the interest will fall and the equilibrium quantity of loanable funds will increase.