Suppose life becomes more unpredictable and households decide to increase their precautionary savings. In this case, the loanable funds model predicts that

A) interest rate goes down, and quantity of borrowed funds increases.
B) interest rate goes down, and quantity of borrowed funds decreases.
C) interest rate goes up, and quantity of borrowed funds decreases.
D) interest rate goes up, and quantity of borrowed funds increases.


A

Economics

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