Demographic changes that increase the number of people in the lending phase (approximately age 50 to 75) and fewer in the borrowing phase (under age 50), would tend to
A) expand the demand for loanable funds and push interest rates upward.
B) expand the demand for loanable funds and push interest rates downward.
C) expand the supply of loanable funds and push interest rates upward.
D) expand the supply of loanable funds and push interest rates downward.

Question

Quizplus · Accepted Answer

As more people enter the lending phase, they are likely to save more, increasing the supply of loanable funds. This increased supply tends to push interest rates downward.

Demographic Changes That Increase the Number of People in the Lending