A rise in the demand for funds may not result in a rise in interest rates if

Question

Quizplus · Accepted Answer

If there is an increase in the supply of funds, this will offset the rise in demand and prevent a rise in interest rates. This is because the increased supply means that there are more funds available to borrow, which can help to lower the cost of borrowing. Option B is incorrect because if the supply curve shifts to the left, this means that there is less supply available, which would typically result in higher interest rates. Option C is also incorrect because the behavior of net lenders would not necessarily have an impact on interest rates if they are not actively participating in the market.

A Rise in the Demand for Funds May Not Result