When markets are less liquid, people are _______ willing to save, which pushes interest rates _______.
A) less; higher
B) more; higher
C) less; lower
D) more; lower

Question

Quizplus · Accepted Answer

When markets are less liquid, people are less willing to save because there is a greater risk of not being able to sell assets quickly if needed. This decrease in demand for saving leads to a decrease in the supply of loanable funds, which in turn pushes interest rates higher.

When Markets Are Less Liquid, People Are _______ Willing to Save