When individuals become more willing to save because their incomes have increased,the interest rate _____ and the quantity of borrowing and lending _____.
A) increases;increases
B) increases;decreases
C) decreases;decreases
D) decreases;increases

Question

Quizplus · Accepted Answer

When individuals become more willing to save, the supply of loanable funds increases, leading to a decrease in interest rates. This, in turn, increases the quantity of borrowing and lending as the cost of borrowing decreases. Therefore, option D is the correct choice.

When Individuals Become More Willing to Save Because Their Incomes