If Pakistani citizens become less concerned with the future and save less at each real interest rate ?
Correct answer: A. Real interest rates rise and investment falls
- A. Real interest rates rise and investment falls
- B. Real interest rates rise and investment rises
- C. Real interest rates fall and investment rises
- D. Real interest rates fall and investment falls
Explanation
Lower saving at every real interest rate shifts the supply of loanable funds left, raising the equilibrium interest rate. Higher borrowing costs reduce the quantity of funds demanded for investment.
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