In the loanable funds market, the price that borrowers must pay for earlier availability is the
A) inflation rate.
B) wage rate.
C) interest rate.
D) exchange rate.

Question

Quizplus · Accepted Answer

The price that borrowers must pay for earlier availability is the interest rate. This is because when borrowers want to borrow funds earlier than they would be available in the regular market, lenders often charge a higher interest rate to compensate them for the opportunity cost of lending out their funds earlier than they had planned. Therefore, the interest rate serves as the price that borrowers must pay for earlier availability in the loanable funds market.

In the Loanable Funds Market, the Price That Borrowers Must