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Macroeconomics

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Household Savings and Retirement Anticipation

MACRO-N45H1K

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?

A

An increase in both the demand for and supply of funds, with an indeterminate impact on the real interest rate.

B

A reduction in the quantity of funds available for investment purposes.

C

An increase in the supply of loanable funds with a reduction in the rate of interest.

D

A decrease in the supply of loanable funds given a reduction in the rate of interest.