Asked by drishika gulati on Jun 10, 2024
Verified
Katleen is considering expanding her jewelry shop. If interest rates rise she is
A) less likely to expand.This illustrates why the supply of loanable funds slopes downward.
B) more likely to expand.This illustrates why the supply of loanable funds slopes upward.
C) less likely to expand.This illustrates why the demand for loanable funds slopes downward.
D) more likely to expand.This illustrates why the demand for loanable funds slopes upward.
Interest Rates
The expense associated with lending money or the profit from saving it, represented as a percentage of the total amount lent or saved.
Loanable Funds
The money available for borrowing, reflecting the relationship between the demand for loans and the supply of savings in an economy.
- Understand how investment decisions are influenced by changes in interest rates.
Verified Answer
MT
Maxim TutrinJun 14, 2024
Final Answer :
C
Explanation :
Higher interest rates increase the cost of borrowing, making it less attractive for businesses to take out loans for expansion, thus decreasing the demand for loanable funds. This is why the demand curve for loanable funds slopes downward.
Learning Objectives
- Understand how investment decisions are influenced by changes in interest rates.
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