The Equilibrium Real Interest Rate Is 5 Percent

Multiple Choice

The equilibrium real interest rate is 5 percent. If the real interest rate is

A) 2 percent, there is a shortage of loanable funds.
B) 3 percent, then the supply of loanable funds curve will shift leftward as new savers enter the market.
C) anything other than 5 percent, the supply of loanable funds curve and/or the demand for loanable funds curve will shift to move the real interest rate to 5 percent.
D) 6 percent, the demand for loanable funds curve will shift rightward as firms enter the market to borrow at the lower rate.
E) 8 percent, there is a surplus of loanable funds.