Asked by Unbox Chemistry on Jun 24, 2024
Verified
The law of supply states that, ceteris paribus, if the price of loans (known as the "interest rate")rises then the quantity supplied of loans will increase.
Quantity Supplied of Loans
The total amount of loans lenders are willing to provide at a given interest rate during a specific time period.
Law of Supply
A principle in economics stating that as the price of a good or service increases, the quantity supplied also increases, assuming all other factors remain constant.
Interest Rate
The cost of borrowing money or the return on investment, expressed as a percentage of the principal.
- Comprehend the function of pricing within markets as indicators that align the choices of consumers and vendors.
- Recognize the determinants that cause shifts in supply and demand, such as the impact of governmental measures including taxes and subsidies.
Verified Answer
NB
Norma BejaranoJun 30, 2024
Final Answer :
True
Explanation :
According to the law of supply, if all other factors remain equal (ceteris paribus), an increase in the price of a good or service (in this case, the interest rate for loans) will lead to an increase in the quantity supplied. This principle applies to the market for loans, where higher interest rates incentivize lenders to supply more loans due to the higher potential returns.
Learning Objectives
- Comprehend the function of pricing within markets as indicators that align the choices of consumers and vendors.
- Recognize the determinants that cause shifts in supply and demand, such as the impact of governmental measures including taxes and subsidies.