The required return to implement a given business project will be ____ if interest rates are lower. This implies that businesses will demand a ____ quantity of loanable funds when interest rates are lower.
A)greater; lower
B)lower; greater
C)lower; lower
D)greater; greater

Question

The required return to implement a given business project will be ____ if interest rates are lower. This implies that businesses will demand a ____ quantity of loanable funds when interest rates are lower. ​
A)greater; lower
B)lower; greater
C)lower; lower
D)greater; greater

Quizplus · Accepted Answer

When interest rates are lower, the required return to implement a given business project is also lower, making borrowing more attractive. Consequently, businesses will demand a greater quantity of loanable funds to finance their projects due to the lower cost of borrowing.

The Required Return to Implement a Given Business Project Will