Which of the following determine(s)the level of interest rates?
i.The supply of savings by households and businesses
ii.The demand for investment funds
iii.The government's net supply of and/or demand for funds
A) i only
B) ii only
C) i and ii only
D) i, ii and iii

Question

Quizplus · Accepted Answer

All three factors determine the level of interest rates. The supply of savings available in the market affects the supply of loanable funds and it impacts the interest rates. The demand for investment funds like loan, credit, etc. from individuals and firms creates competition in the market and impacts the interest rates. Additionally, the government's net supply of and/or demand for funds can impact the overall interest rates in the economy.

Which of the Following Determine(s)the Level of Interest Rates