The quantity of loanable funds supplied is normally
A) highly interest-elastic.
B) more interest-elastic than the demand for loanable funds.
C) less interest-elastic than the demand for loanable funds.
D) equally as interest-elastic as the demand for loanable funds.
E) A and B

Question

Quizplus · Accepted Answer

The supply of loanable funds comes from savers who are willing to lend money in exchange for interest. The supply of loanable funds is generally less interest-elastic than the demand because savers are usually less sensitive to changes in interest rates compared to borrowers. This means that even if interest rates increase, savers may not necessarily increase the amount they are willing to lend, resulting in a less elastic supply curve. Thus, choice C is the best answer.

The Quantity of Loanable Funds Supplied Is Normally