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The slope of the demand for loanable funds curve represents the a. negative relation between the real interest rate and saving. b. positive relation between the real interest rate and investment. c. positive relation between the real interest rate and saving. d. negative relation between the real interest rate and investment.

Respuesta :

Answer:

d. negative relation between the real interest rate and investment.

Explanation:

The demand curve for loanable funds is a downward sloping curve, with interest as the independent variable.

Such because 'demand' for 'investment' i.e loanable funds is inversely related to 'price' of loanable funds i.e their interest.

  • At higher interest rate : loanable funds & investment is expensive, so it is demanded less
  • At lower interest rate : loanable funds & investment is cheaper, so it is demanded more.

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