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-(Figure: The Market for Loanable Funds II) Use Figure: The Market for Loanable Funds II. If the interest rate is lower than 8%, the quantity supplied of loanable funds will be _____ the quantity of loanable funds demanded.

Question

Use the following to answer questions: 
-(Figure: The Market for Loanable Funds II) Use Figure: The Market for Loanable Funds II. If the interest rate is lower than 8%, the quantity supplied of loanable funds will be _____ the quantity of loanable funds demanded.

Quizplus · Accepted Answer

When the interest rate is lower than 8%, the quantity of loanable funds supplied will be less than the quantity demanded. This is because, at lower interest rates, savers are less inclined to save, leading to a decrease in the supply of loanable funds, while borrowers are more inclined to borrow, increasing the demand for loanable funds.

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