Which of the following is the primary factor that coordinates the actions of borrowers and lenders in the loanable funds market?
A)inflation rate
B)unemployment rate
C)the government
D)interest rate

Question

Quizplus · Accepted Answer

Interest rate is the primary factor that coordinates the actions of borrowers and lenders in the loanable funds market. The interest rate is the price borrowers pay to lenders for the use of funds, and it serves as a signal to both borrowers and lenders about the availability of funds and the demand for loans. When interest rates are high, lenders are more willing to supply funds, and borrowers are less willing to demand loans. Conversely, when interest rates are low, lenders are less willing to supply funds, and borrowers are more willing to demand loans. This interaction between borrowers and lenders helps to determine the equilibrium interest rate in the loanable funds market.

Which of the Following Is the Primary Factor That Coordinates