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8 November, 16:20

Which of the following could explain a decrease in the interest rate and an increase in the equilibrium quantity of investment?

a. the supply of loanable funds shifted right.

b. the supply of loanable funds shifted left.

c. the demand for loanable funds shifted right.

d. the demand for loanable funds shifted left.

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Answers (1)
  1. 8 November, 18:52
    0
    Option (A) is correct.

    Explanation:

    When the supply of loanable funds increases then as a result there is a shift in the supply curve of loanable funds and therefore, this shift would cause the interest rate to fall and equilibrium quantity to increase.

    At a lower interest rate,

    The people take loans from the financial institutions because it will become affordable for them and hence, there is an increase in the level of investment.

    Whenever the supply of loanable funds exceeds the demand for loanable funds, the interest rate must fall.
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Home » Business » Which of the following could explain a decrease in the interest rate and an increase in the equilibrium quantity of investment? a. the supply of loanable funds shifted right. b. the supply of loanable funds shifted left. c.
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