When the supply of money saved exceeds the demand for money, then banks will
A) increase interest rates to attract more savers.
B) lower interest rates to discourage savers.
C) put money on sale by making loans more attractive.
D) both A and B above.
E) both B and C above.

Question

Quizplus · Accepted Answer

When the supply of money saved exceeds the demand for money, banks will lower interest rates to discourage savers and make loans more attractive to increase demand for borrowing. This is because lower interest rates make saving less attractive and borrowing more attractive, helping to balance the supply and demand for money.

When the Supply of Money Saved Exceeds the Demand for Money