If economic expansion is expected to decrease, the demand for loanable funds should ____ and interest rates should ____.
A)increase; increase
B)increase; decrease
C)decrease; decrease
D)decrease; increase

Question

If economic expansion is expected to decrease, the demand for loanable funds should ____ and interest rates should ____. ​
A)increase; increase
B)increase; decrease
C)decrease; decrease
D)decrease; increase

Quizplus · Accepted Answer

When economic expansion is expected to decrease, the demand for loanable funds decreases because businesses and consumers are less likely to borrow for investment and spending. This decrease in demand typically leads to lower interest rates as lenders try to attract borrowers.

If Economic Expansion Is Expected to Decrease, the Demand for Loanable