To answer this question, we need to consider how the real interest rate affects the supply and demand for loanable funds in a typical economic model.
If the real interest rate is at 6 percent, it generally implies a situation where the quantity of loanable funds demanded may begin to exceed the quantity supplied (or vice versa). If the real interest rate is perceived as too high, there would typically be less borrowing, which could lead to excess supply of funds (as fewer borrowers would want to take loans at that rate).
Given this context:
- a. The demand for loanable funds curve to shift left suggests that at 6 percent, demand for loans would decrease, which could happen if borrowers find the interest too high.
- b. The supply for loanable funds curve to shift right implies that lenders are more willing to offer loans at that interest rate, which doesn't directly follow without additional context about savings behavior or outside factors.
- c. "All of these are correct" implies all previous statements are true, which may not be the case.
- d. The real interest rate to fall indicates that if the demand for loans decreases, real interest rates may decrease as a result of that excess supply.
Given these interpretations, if we are considering traditional economic dynamics, the most likely conclusion would be d. the real interest rate to fall due to a condition where demand decreases around that level, thus leading to downward pressure on the rate.
Therefore, the correct answer is:
d. the real interest rate to fall.
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