What is the likely effect on Pakistan's loanable funds market if its citizens increase their savings?

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The supply curve of loanable funds will move rightward, causing a decrease in the real interest rate.The demand curve for loanable funds will shift to the right, leading to an increase in the real interest rate.The demand for loanable funds will rise, resulting in a lower real interest rate.The supply of loanable funds will increase, pushing the real interest rate upward.No change will occur in either the supply or demand of loanable funds.

Explanation

When citizens save more, the supply of loanable funds increases, shifting the supply curve to the right. This greater availability of funds causes the real interest rate to decline as lenders compete to provide loans.