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-(Figure: The Market for Loanable Funds II) Use Figure: The Market for Loanable Funds II. Other things being equal, if there is a decrease in the interest rate below 8%, _____ quantity of loanable funds will be demanded.

Question

Use the following to answer questions: 
-(Figure: The Market for Loanable Funds II) Use Figure: The Market for Loanable Funds II. Other things being equal, if there is a decrease in the interest rate below 8%, _____ quantity of loanable funds will be demanded.

Quizplus · Accepted Answer

A decrease in the interest rate below 8% causes an increase in the quantity of loanable funds demanded. This is shown by a movement along the demand curve from point A to point B. Therefore, the correct answer is B- a larger quantity of loanable funds will be demanded.

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