The demand and supply of loanable funds increase simultaneously.This would cause the equilibrium

Question

Quizplus · Accepted Answer

When both demand and supply of loanable funds increase, it will lead to an increase in the quantity of loanable funds, but the effect on the equilibrium interest rate would be uncertain. The increase in demand would lead to an increase in the equilibrium interest rate, while the increase in supply would lead to a decrease in the equilibrium interest rate. The net effect on the equilibrium interest rate would depend on the magnitude of each shift. Therefore, the quantity of loanable funds would increase, but the effect on the equilibrium interest rate would be uncertain.

The Demand and Supply of Loanable Funds Increase Simultaneously