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Assume that households decide to save a greater portion of their income in anticipation of retirement.
Which of the following occurs in the loanable funds market?
An increase in both the demand for and supply of funds, with an indeterminate impact on the real interest rate.
A reduction in the quantity of funds available for investment purposes.
An increase in the supply of loanable funds with a reduction in the rate of interest.
A decrease in the supply of loanable funds given a reduction in the rate of interest.