Suppose Firms Become More Optimistic About the Economy's Ability to Avoid

Multiple Choice

Suppose firms become more optimistic about the economy's ability to avoid a recession and hence the expected profit increases.As a result, the demand for loanable funds curve shifts ________ and the real interest rate ________.

A) rightward; rises
B) rightward; falls
C) leftward; rises
D) leftward; falls
E) rightward; does not change