Which of the following events would be the most likely to cause the nominal interest rate to fall?
A) if the supply of loanable funds increases and the demand for loanable funds increases
B) if the supply of loanable funds decreases and the demand for loanable funds decreases
C) if the supply of loanable funds increases and the demand for loanable funds decreases
D) if the supply of loanable funds decreases and the demand for loanable funds increases

Question

Which of the following events would be the most likely to cause the nominal interest rate to fall?  
A) if the supply of loanable funds increases and the demand for loanable funds increases 
B) if the supply of loanable funds decreases and the demand for loanable funds decreases 
C) if the supply of loanable funds increases and the demand for loanable funds decreases 
D) if the supply of loanable funds decreases and the demand for loanable funds increases

Quizplus · Accepted Answer

When the supply of loanable funds increases and the demand for loanable funds decreases, there is an excess supply of loanable funds which leads to a fall in the nominal interest rate.

Which of the Following Events Would Be the Most Likely