Answer:
The correct answer is option a.
Explanation:
When there is a leftward shift in the demand curve for loan-able funds, there will be excess supply of funds . The equilibrium interest rate will fall. There will also be a decline in the quantity of loan-able funds.
The graph given below shows the market for loan-able funds.
The x axis represents quantity of loan-able funds while the Y axis represents interest rate. When the demand curve moves from D to D', the interest rate falls from R to R'. The quantity of funds also declines from Q to Q'. The equilibrium shifts from E to E'.
