What effect will an increase in interest rates have on the quantity of loanable funds supplied?

a. There will be no change in quantity supplied.

b. Quantity supplied will decrease.

c. Quantity supplied will increase.

d. Some lenders will offer more while others offer less.

As interest rate decreases, what happens to the quantity of loanable funds demanded?

a. There will be no change in quantity demanded.

b. Some borrowers will demand more funds while others will demand less.

c. Quantity demanded will decrease.

d. Quantity demanded will increase.

Question

Business

Nyasia Watts

3 March, 16:18

What effect will an increase in interest rates have on the quantity of loanable funds supplied?

a. There will be no change in quantity supplied.

b. Quantity supplied will decrease.

c. Quantity supplied will increase.

d. Some lenders will offer more while others offer less.

As interest rate decreases, what happens to the quantity of loanable funds demanded?

a. There will be no change in quantity demanded.

b. Some borrowers will demand more funds while others will demand less.

c. Quantity demanded will decrease.

d. Quantity demanded will increase.

+4

Answers (1)

Know the Answer?

Roy Bradshaw · Answer 1

(b) An increase in interest rates the quantity of loanable funds supplied will decrease

Explanation:

From the perspective of a borrower as the interest rates on the loanable amount increases, the cost of borrowing goes up and the person/Business houses will be less likely to borrow. Therefore, as interest rates increase, the quantity of funds demanded decreases.