Asked by Maggie Nicole on Jul 06, 2024
Verified
A decrease in the interest rate,other things constant,will:
A) shift the demand for loanable funds curve to the right.
B) shift the demand for loanable funds curve to the left.
C) increase the quantity of loanable funds demanded.
D) increase the quantity of loanable funds supplied.
E) shift the supply of loanable funds curve to the right.
Interest Rate
The percentage charged on borrowed money or paid on savings accounts, essentially the cost of borrowing money or the reward for saving.
Loanable Funds
The total amount of capital available in the financial markets for borrowing, influenced by savings and investments.
Quantity Demanded
The total amount of a good or service that consumers are willing to buy at a given price over a specific time period.
- Assess the consequences of fluctuations in the supply and demand for loanable funds on the interest rate.
Verified Answer
RT
rodley thelorsJul 11, 2024
Final Answer :
C
Explanation :
A decrease in interest rate will lead to a lower cost of borrowing, making it more attractive for consumers and businesses to take out loans to finance investments and purchases. This will increase the quantity of loanable funds demanded as individuals and firms will want to obtain more funds at the lower interest rate.
Learning Objectives
- Assess the consequences of fluctuations in the supply and demand for loanable funds on the interest rate.