As interest rates decline,all of the following will result except
A)Quantity demanded of loanable funds increases.
B)Quantity supplied of loanable funds decreases.
C)Cost of borrowing diminishes.
D)Demand curve for loanable funds shifts to the left.

Question

Quizplus · Accepted Answer

When interest rates decline, the demand for loanable funds typically increases, resulting in an increase in the quantity demanded of loanable funds (A) and a decrease in the cost of borrowing (C). However, the quantity supplied of loanable funds may decrease as financial institutions and individuals may be less willing to supply funds at lower interest rates. This means that the supply curve for loanable funds shifts to the left, not the demand curve (D).

As Interest Rates Decline,all of the Following Will Result Except