An increase in the supply of loanable funds increases the interest rate and decreases the demand for capital.

Name: An increase in the supply of loanable funds increases the interest rate and decreases the demand for capital.
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Question

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An increase in the supply of loanable funds would lead to a decrease in the interest rate and an increase in the demand for capital. This is because there are more funds available at a lower cost, making it more attractive for borrowers to invest in capital projects.

An Increase in the Supply of Loanable Funds Increases the Interest