A decrease in the supply of loanable funds and an increase in the demand for loanable funds will

Question

Quizplus · Accepted Answer

A decrease in the supply of loanable funds would lead to higher interest rates because there are fewer funds available for borrowing. An increase in demand for loanable funds would also push interest rates higher as more borrowers compete for the funds. However, the quantity of funds loaned could either increase or decrease depending on the relative shifts in supply and demand; the interest rate adjusts to balance the quantity supplied and demanded.

A Decrease in the Supply of Loanable Funds and an Increase