Equilibrium in the market for funds occurs when the
A)lenders and borrowers are mutually satisfied at some interest rate.
B)marginal revenue product of investment using the funds equals the interest rate.
C)demand curve for funds and the supply curve for funds intersect.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Equilibrium in the market for funds is achieved when lenders and borrowers agree on an interest rate that satisfies both parties, and at the same time, the marginal revenue product of investment using the funds equals the interest rate. This point of mutual satisfaction is represented by the intersection of the demand and supply curves for funds. Therefore, all of the given options are correct.

Equilibrium in the Market for Funds Occurs When the