-In the above figure, the demand for loanable funds curve is drawn for the average expected profit. If the real interest rate is constant at 6 percent and and the expected profit rises, the amount of loanable funds demanded will be
A) greater than $450 billion.
B) $450 billion.
C) less than $450 billion.
D) between $300 billion and $450 billion.

Question

-In the above figure, the demand for loanable funds curve is drawn for the average expected profit. If the real interest rate is constant at 6 percent and and the expected profit rises, the amount of loanable funds demanded will be
A) greater than $450 billion. 
B) $450 billion. 
C) less than $450 billion. 
D) between $300 billion and $450 billion.

Quizplus · Accepted Answer

When the expected profit rises, businesses are more willing to borrow at any given interest rate, leading to an increase in the demand for loanable funds. Therefore, the amount of loanable funds demanded will be greater than $450 billion.

-In the Above Figure, the Demand for Loanable Funds Curve