The interest rate is determined by
A)government pronouncements.
B)market forces of supply and demand.
C)banks and lenders.
D)managers of large corporations.

Question

Quizplus · Accepted Answer

Market forces of supply and demand ultimately determine interest rates. When there is high demand for borrowing money, lenders can charge higher interest rates. Conversely, when there is a surplus of available funds and less demand for borrowing, interest rates may decrease. While government policies and actions can influence interest rates, they cannot completely control them. Banks and lenders are intermediaries in the market for loans and other financial services, but they do not solely determine interest rates. Likewise, managers of large corporations may borrow funds and negotiate interest rates with lenders, but they do not directly set interest rates.

The Interest Rate Is Determined by