If an increase in the expected future returns on investment leads to an increase in the current level of investment projects undertaken,the loanable funds market will experience an increase in the _____ loanable funds and _____ in equilibrium interest rates.
A) demand for;an increase
B) supply of;an increase
C) demand for;a decrease
D) supply of;a decrease

Question

Quizplus · Accepted Answer

When expected future returns on investment increase, firms are more likely to undertake new investment projects, leading to an increase in the demand for loanable funds. This higher demand, with supply remaining constant, typically results in an increase in equilibrium interest rates.

If an Increase in the Expected Future Returns on Investment