The monetary expansion decreases and there is an increase in equilibrium interest rate then supply curve of funds must shift _____________?
Correct answer: C. up and to the left
- A. down and to the left
- B. down and to the right
- C. up and to the left
- D. up and to the right
Explanation
A decrease in monetary expansion reduces the supply of loanable funds. The resulting leftward supply shift moves the curve up and to the left and tends to raise the equilibrium interest rate.
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