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- Subject
- Stockseconomics-mcqs › stocks
- Published
- 30 May 2019
- Last updated
- 28 May 2026
Explanation
When citizens save less at all real interest rates, the supply of loanable funds declines. This reduction in savings causes real interest rates to rise, which discourages investment, leading to a decrease in investment levels.
More Stocks MCQs
Practice related questions from the same subject.
- 1.What is the effect of an increase in the budget surplus on the market for loanable funds?
- 2.What effect does a rise in the budget deficit have on public savings?
- 3.What is the effect of a larger budget deficit on the real interest rate and the demand for loanable funds used for investment?
- 4.Which combination of government policies is most effective in promoting economic growth?
- 5.What does investment primarily refer to?
- 6.If the public reduces consumption by Rs 100 billion while the government increases its spending by Rs 100 billion, assuming all other factors remain constant, which statement is correct?
- 7.What occurs when government expenditures surpass the revenue collected from taxes?
- 8.What does national saving represent in economic terms?
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