Arrange the following steps in the correct sequence to explain how an increase in private savings affects real interest rates in the loanable funds market: A) Increased savings lead to a higher supply of loanable funds, B) Lower real interest rates encourage more borrowing, C) The supply curve for loanable funds shifts to the right, D) Higher investment stimulates economic growth.

When people save more money, it increases the amount of money available for loans, so we start with increased savings leading to a higher supply of loanable funds. This increase in supply shifts the supply curve for loanable funds to the right. As the supply of funds grows, real interest rates begin to fall. Lower real interest rates make borrowing cheaper, which encourages businesses and individuals to take out loans. When more borrowing happens, it leads to higher investment, which can stimulate economic growth.