Suppose the Real Interest Rate Increases from 4 Percent to 6

Multiple Choice

Suppose the real interest rate increases from 4 percent to 6 percent. As a result,

A) governments decrease the quantity supplied of loanable funds.
B) firms increase their demand for loanable funds.
C) governments decrease their demand for loanable funds.
D) firms decrease the quantity demanded of loanable funds.
E) governments increase the supply of loanable funds.