Which is not a reason the demand curve for loanable funds slopes down?
A)The value of the MRP in terms of today's money shrinks as the interest rate rises.
B)Future returns must be discounted more when the interest rate rises.
C)As the interest rate rises, more and more investments become unprofitable.
D)Production becomes more profitable in the future, reducing required inputs today.

Question

Quizplus · Accepted Answer

Choice D is not a reason why the demand curve for loanable funds slopes down. The other choices all explain why the demand for loanable funds decreases as the interest rate rises. For example, choice A explains that as the interest rate rises, the value of the marginal revenue product (MRP) of capital decreases, making it less profitable to invest. Choices B and C both suggest that higher interest rates increase the discount rate applied to future returns, making investment less attractive.

Which Is Not a Reason the Demand Curve for Loanable