Asked by Keletso J. Letsholo on May 30, 2024
Verified
There will be pressure on the interest rate for loanable funds to increase when
A) supply increases.
B) demand decreases.
C) quantity supplied exceeds quantity demanded.
D) quantity demanded exceeds the quantity supplied.
Interest Rate
The cost of borrowing money, typically expressed as an annual percentage of the principal.
Loanable Funds
Funds available for borrowing, which consist of household savings and international capital flows.
- Determine the elements that result in changes in the supply and demand of loanable funds.
- Examine the impact of interest rate fluctuations on the tendencies to save and borrow.
Verified Answer
MH
Mahdi HasanJun 05, 2024
Final Answer :
D
Explanation :
When the quantity demanded exceeds the quantity supplied, it indicates that more people want to borrow money than there is available. This excess demand puts upward pressure on interest rates as lenders can charge more due to the higher competition for available funds.
Learning Objectives
- Determine the elements that result in changes in the supply and demand of loanable funds.
- Examine the impact of interest rate fluctuations on the tendencies to save and borrow.