If the supply of loanable funds decreases and the demand for loanable funds increases at the same time,interest rates will:

Question

Quizplus · Accepted Answer

When the supply of loanable funds decreases and the demand for loanable funds increases at the same time, there will be a shortage of loanable funds which leads to an increase in interest rates. This is because lenders will want to charge higher interest rates to make their funds available to borrowers due to increased demand resulting in a higher cost of borrowing.

If the Supply of Loanable Funds Decreases and the Demand