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3 June, 08:46

Other things the same, an increase in the interest rate ...

a. would shift the demand for loanable funds to the right.

b. would increase the quantity of loanable funds demanded.

c. would decrease the quantity of loanable funds demanded.

d. would shift the demand for loanable funds to the left.

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Answers (1)
  1. 3 June, 12:24
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    Answer: Option (d) is correct.

    Explanation:

    Other things remains constant, an increase in the interest rate will generally reduces the demand for loanable funds because loanable funds become more expensive for the borrowers. This increase in interest rate also shift the demand curve towards left for the loanable funds.

    With increased interest rate, borrowers have to pay more for the loans. Conversely, if there is a fall in an interest rate then as a result demand for the loanable funds increases, as it will become cheaper for the borrowers.
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Home » Business » Other things the same, an increase in the interest rate ... a. would shift the demand for loanable funds to the right. b. would increase the quantity of loanable funds demanded. c. would decrease the quantity of loanable funds demanded. d.
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