When does the purchase of a capital asset add to the demand for loanable funds?
A)only if the asset is located at home
B)only if the asset is located abroad
C)whether the asset is located at home or abroad
D)never

Question

Quizplus · Accepted Answer

The purchase of a capital asset, whether it is located at home or abroad, will require funds to be borrowed. This increases the demand for loanable funds, as businesses or individuals may need to take out loans to finance the purchase of the asset. Therefore, option C is correct. Option A and B are incorrect, as the location of the asset does not determine whether it will increase the demand for loanable funds. Option D is incorrect, as the purchase of a capital asset usually requires financing and increases demand for loanable funds.

When Does the Purchase of a Capital Asset Add to the Demand