Asked by miriam canela on May 28, 2024
Verified
If technological breakthroughs in the Internet cause large numbers of firms to consider investment projects they hadn't previously thought of, then:
A) a shift in the supply of loanable funds will cause interest rates to rise.
B) a shift in the supply of loanable funds will cause interest rates to fall.
C) a shift in the demand for loanable funds will cause interest rates to rise.
D) a shift in the demand for loanable funds will cause interest rates to fall.
E) there will be an excess supply of loanable funds.
Technological Breakthroughs
Significant progression or development in technology that creates a new foundation for further advancements and innovation.
Investment Projects
Initiatives or plans undertaken to allocate resources, expecting to generate returns or benefits over time.
Loanable Funds
The market for lending and borrowing of capital, where the supply comes from savings and the demand comes from borrowers.
- Absorb the principles that contribute to changes in the market for loanable funds, specifically supply and demand, and the resultant fluctuations in interest rates.
- Assess the role of technological advancements, government interventions, and personal economic decisions in shaping the financial market.
Verified Answer
DG
Denisse GarcíaMay 29, 2024
Final Answer :
C
Explanation :
If large numbers of firms consider investment projects they hadn't previously thought of, then there will be an increase in demand for loanable funds. This will cause interest rates to rise as lenders will want to offer loans at higher rates to earn more money.
Learning Objectives
- Absorb the principles that contribute to changes in the market for loanable funds, specifically supply and demand, and the resultant fluctuations in interest rates.
- Assess the role of technological advancements, government interventions, and personal economic decisions in shaping the financial market.