Under the loanable funds theory, which of the following increase the demand for loanable funds by businesses and governments?

Question

Quizplus · Accepted Answer

All of the options listed increase the demand for loanable funds. Government budget deficits often lead to increased borrowing to finance the deficit. Business cycle expansions and expectations for profitable investment opportunities increase businesses' demand for funds to invest in new projects. Inflation expectations can also increase demand for loans, as borrowers expect to repay in less valuable dollars in the future.

Under the Loanable Funds Theory, Which of the Following Increase