An increase in the supply for loanable funds accompanied by a decrease in demand will cause interest rates to:

Question

Quizplus · Accepted Answer

An increase in the supply of loanable funds accompanied by a decrease in demand will lead to a surplus of funds in the market. As a result, lenders will compete to lend out their funds, which will lead to a decrease in interest rates to make their offerings more attractive. Therefore, interest rates will decrease.

An Increase in the Supply for Loanable Funds Accompanied by a Decrease