Which of the following would make the equilibrium interest rate decrease and the equilibrium quantity of loanable funds increase?
A)The supply of loanable funds shifts right.
B)The supply of loanable funds shifts left.
C)The demand for loanable funds shifts right.
D)The demand for loanable funds shifts left.

Question

Quizplus · Accepted Answer

When the supply of loanable funds shifts right, this means there is an increase in the supply of funds available for lending. This will decrease the equilibrium interest rate and increase the equilibrium quantity of loanable funds. The reason for this is that the increased supply will make it cheaper for borrowers to borrow money, leading to a decrease in the interest rate. At the same time, the increased supply will encourage more borrowing, leading to an increase in the quantity of loanable funds demanded.

Which of the Following Would Make the Equilibrium Interest Rate