-In the above figure, new expectations of booming business conditions and a higher expected profit will
A) shift the demand for loanable funds curve leftward.
B) shift the demand for loanable funds curve rightward.
C) have no effect on the demand for loanable funds curve.
D) make the demand for loanable funds curve become horizontal.

Question

-In the above figure, new expectations of booming business conditions and a higher expected profit will
A) shift the demand for loanable funds curve leftward. 
B) shift the demand for loanable funds curve rightward. 
C) have no effect on the demand for loanable funds curve. 
D) make the demand for loanable funds curve become horizontal.

Quizplus · Accepted Answer

When businesses expect booming conditions and higher profits, they are more likely to invest in new projects and expansion, increasing the demand for loans to finance these investments. This expectation leads to a rightward shift in the demand for loanable funds curve.

-In the Above Figure, New Expectations of Booming Business Conditions