If Pakistani citizens become more thrifty we would expect ?
Correct answer: A. The supply of loanable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to fall.
- A. The supply of loanable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to fall.
- B. The demand for loanable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to rise
- C. The demand for loandable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to fall
- D. The supply of loandable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to rise
Explanation
Greater thrift means households save more, increasing the supply of loanable funds. The supply shift lowers the equilibrium real interest rate, so option a correctly describes both effects.
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