Holding supply constant, a decrease in the demand for loanable funds will result in a decrease in interest rates.

Question

Quizplus · Accepted Answer

According to the law of supply and demand, a decrease in demand (holding supply constant) results in a decrease in prices. In the case of loanable funds, prices are represented by interest rates, so a decrease in demand for loanable funds will result in a decrease in interest rates.

Holding Supply Constant, a Decrease in the Demand for Loanable