What happens when the quantity of funds demanded is less than the quantity supplied?

Question

Quizplus · Accepted Answer

If the quantity of funds demanded is less than the quantity supplied, it means there is a surplus of funds in the market. To get rid of this surplus, lenders will need to lower interest rates, which attracts borrowers and leads to an increase in demand for funds. As demand increases, the quantity supplied will decrease until it eventually matches the quantity demanded. This will cause interest rates to fall and bond prices to rise.

What Happens When the Quantity of Funds Demanded Is Less