-The effect on the current market for loans of borrowers' expectations that the Fed will lower the discount rate in the near future is shown by the movement from:

Question

Quizplus · Accepted Answer

When borrowers expect the Fed to lower the discount rate in the near future, they anticipate cheaper borrowing costs. This expectation increases the demand for loans now, as borrowers may delay borrowing in anticipation of lower rates. Therefore, the correct answer involves an increase in the demand for loans, which is represented by a rightward shift of the demand curve from D1 to D2 in a figure. Since the question specifies the movement is related to borrowers' expectations affecting demand, the correct choice is the one indicating an increase in demand, which is option B.

-The Effect on the Current Market for Loans of Borrowers