Technological change can increase the demand for loanable funds because it
A) lowers the interest rate.
B) can increase the expected profit.
C) has little effect on production cost.
D) decreases the need for additional equipment.
E) increases people's expected future disposable income.

Question

Quizplus · Accepted Answer

Technological change can increase the expected profit for firms, which can lead to increased investment in new projects and expansion. This, in turn, would increase the demand for loanable funds as firms borrow to finance their investment opportunities.

Technological Change Can Increase the Demand for Loanable Funds Because