When markets are less liquid, the supply of loanable funds is _______ and the economy grows _______.

Question

Quizplus · Accepted Answer

When markets are less liquid, it means that there are fewer buyers and sellers actively participating in the market. As a result, the supply of loanable funds is lower because there are fewer lenders willing to lend money. This can lead to higher interest rates, making it more expensive for borrowers to obtain funds, and can slow down the economy's growth.

When Markets Are Less Liquid, the Supply of Loanable Funds