Asked by
Alisa Maldonado
on Nov 26, 2024
Verified
In the market for loanable funds,
A) an increase in available bank lending will increase the interest rate.
B) a decrease in saving will reduce the interest rate.
C) an increase in borrowing for investment will increase the interest rate.
D) a decrease in government borrowing will increase the interest rate.
Interest Rate
The percentage of a loan subject to interest fees for the borrower, often shown as an annual portion of the outstanding loan balance.
Bank Lending
The process by which banks offer loan products to customers, thereby generating profits from the interest charged.
- Understand the function of the equilibrium interest rate in equilibrating the supply and demand for loanable funds.
- Analyze how modifications in interest rates shape the decisions of borrowers and lenders in the commercial sphere.
Verified Answer
LF
Learning Objectives
- Understand the function of the equilibrium interest rate in equilibrating the supply and demand for loanable funds.
- Analyze how modifications in interest rates shape the decisions of borrowers and lenders in the commercial sphere.