Given the supply of and demand for loans:
A) a decrease in demand will increase the equilibrium interest rate on loans.
B) a decrease in supply will decrease the equilibrium interest rate on loans.
C) an increase in demand will increase the equilibrium quantity of loans made.
D) an increase in supply will decrease the equilibrium quantity of loans made.

Question

Quizplus · Accepted Answer

An increase in demand for loans, while supply remains constant, will lead to an increase in the equilibrium quantity of loans made because lenders will be willing to provide more loans at higher interest rates to meet the increased demand.

Given the Supply of and Demand for Loans