In 2006, before the Great Recession, the economy was booming and consumer demand was high. The good economic conditions caused the _______ for loanable funds to _______.
A) demand; increase
B) demand; decrease
C) supply; increase
D) supply; decrease

Question

Quizplus · Accepted Answer

When the economy is booming and consumer demand is high, businesses have greater opportunities to invest and expand, which creates a higher demand for loanable funds. As a result, the demand for loanable funds increases.

In 2006, Before the Great Recession, the Economy Was Booming