Question: Use the following graph to answer the questions. a. With the shift in the demand curve for loan able funds, what happens to the equilibrium

Use the following graph to answer the questions.

a. With the shift in the demand curve for loan able funds, what happens to the equilibrium real interest rate and the equilibrium quantity of loan able funds?
b. How can the equilibrium quantity of loan able funds increase when the real interest rate increases? Doesn't the quantity of loan able funds demanded decrease when the interest rate increases?
c. How much would the quantity of loan able funds demanded have increased if the interest rate had remained at i1?
d. How much does the quantity of loan able funds supplied increase with the increase in the interest rate from i1 to i2?

Real interest 's rate D, L3 Loanable funds (dollars per year)

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