According to the loanable funds approach to interest rate determination,the supply curve slopes up because:
A) the lower the interest rates, the more loanable funds will be supplied.
B) higher interest rates reduce the inflation rate.
C) a rise in interest rates makes lenders more willing to supply funds.
D) when bond prices are high, more loanable funds will be supplied.

Question

Quizplus · Accepted Answer

A rise in interest rates makes lending more attractive to lenders because they can earn more on the loans they provide, leading to an increase in the supply of loanable funds.

According to the Loanable Funds Approach to Interest Rate Determination,the