An increase in the supply for loanable funds accompanied by a decrease in demand will cause interest rates to:

Question

Quizplus · Accepted Answer

An increase in the supply of loanable funds means that there are more funds available to be loaned out, which could lead to a decrease in interest rates. However, if demand for those funds decreases at the same time, it could cause an even larger decrease in interest rates. Therefore, the most likely effect of an increase in supply and decrease in demand is a decrease in interest rates.

An Increase in the Supply for Loanable Funds Accompanied by a Decrease