Asked by divine guthrie on Mar 10, 2024
Verified
Ceteris paribus, a decrease in the demand for loans
A) drives the interest rate down.
B) drives the interest rate up.
C) might not have any effect on interest rates.
D) results from an increase in business prospects and a decrease in the level of savings.
Demand for Loans
The desire or willingness of individuals or businesses to borrow money from financial institutions at given rates and terms.
- Understand the impact of changes in supply and demand for loans on interest rates.
Verified Answer
ZM
Zachary MorrisMar 10, 2024
Final Answer :
A
Explanation :
A decrease in the demand for loans means less borrowing is happening. According to the law of supply and demand, if demand decreases (with supply remaining constant), the price for the borrowed money, which is the interest rate, will decrease.
Learning Objectives
- Understand the impact of changes in supply and demand for loans on interest rates.
Related questions
An $8,000 Demand Loan at a Fixed Simple Interest Rate ...
Ernie's Electronics Sells an LED HD Television Priced at $2395 ...
In an Insurance Settlement for Bodily Injury, a Court Awarded ...
A $9,000, Four-Year Term Loan Requires Monthly Payments of $220 ...
How Much Longer Will It Take Monthly Payments of $1,000 ...