As a result of an increase in the supply of savings:
A) both the interest rate and the demand for borrowing decrease.
B) the interest rate increases,but the demand for borrowing decreases.
C) both the interest rate and the demand for borrowing increase.
D) the interest rate decreases,but the amount of borrowing increases.

Question

Quizplus · Accepted Answer

An increase in the supply of savings in the economy typically leads to a decrease in interest rates because there is more money available for lending. Lower interest rates make borrowing more attractive, leading to an increase in the amount of borrowing.

As a Result of an Increase in the Supply of Savings