If the supply of loanable funds increases (demand unchanged), interest rates and security prices will tend to fall.

Question

Quizplus · Accepted Answer

If the supply of loanable funds increases while demand remains unchanged, interest rates will tend to fall due to the higher availability of funds, but security prices will tend to rise as lower interest rates make bonds and other fixed-income securities more attractive, increasing their prices.

If the Supply of Loanable Funds Increases (Demand Unchanged), Interest