If the demand for loanable funds increases,ceteris paribus,interest rates will:
A) increase.
B) decrease.
C) remain the same.
D) change indeterminately.

Question

Quizplus · Accepted Answer

When the demand for loanable funds increases, there is a higher demand for borrowing money, and therefore lenders can charge higher interest rates. As such, interest rates will increase, assuming other variables are held constant (ceteris paribus).

If the Demand for Loanable Funds Increases,ceteris Paribus,interest Rates Will