Tech Corp is considering purchasing a new technology that will increase productivity by twenty per cent. If Tech Corp decides to make this investment at the going real interest rate, then
A) the demand for loanable funds increases.
B) the supply of loanable funds increases.
C) the quantity of loanable funds demanded increases.
D) saving increases.
E) Tech Corp's profits will decline.

Question

Quizplus · Accepted Answer

When a company decides to invest in new technology to increase productivity, it typically needs to borrow money to finance the investment. This action increases the demand for loanable funds in the financial markets because the company is seeking additional funds to finance its investment.

Tech Corp Is Considering Purchasing a New Technology That Will