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31 December, 15:26

If investors sell their stocks and increase their money holdings due to a bad economy then

a. demand for loanable funds will increase.

b. demand for loanable funds will decrease.

c. supply of loanable funds will increase.

d. supply of loanable funds will decrease.

e. quantity demanded of loanable funds will decrease.

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Answers (1)
  1. 31 December, 16:50
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    d. supply of loanable funds will decrease.

    Explanation:

    In the loanable funds theory, the supply of loanable funds is generally given by savings and dishoarding, while the demand of loanable funds is influenced by investments and changes in interest rates. In this case, investors, are selling their stocks and then hold the proceeds from the sales. This is hoarding; the money is not deposited nor reinvested due to bad economy. Therefore, it will result in a decrease in supply of loanable funds, making choice D correct.
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Home » Business » If investors sell their stocks and increase their money holdings due to a bad economy then a. demand for loanable funds will increase. b. demand for loanable funds will decrease. c. supply of loanable funds will increase. d.
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