All else being equal,the demand curve for loanable funds may shift to the left (decrease)as a result of:
A) an increase in the supply of loanable funds.
B) expectations of forthcoming economic growth.
C) an increase in the risk of bonds relative to other assets.
D) an improvement in business prospects.

Question

Quizplus · Accepted Answer

An increase in the risk of bonds relative to other assets would lead to a decrease in the demand for loanable funds, as investors would be less willing to invest in bonds and other financial assets, thereby shifting the demand curve for loanable funds to the left. On the other hand, choices A, B, and D would all increase the demand for loanable funds and shift the demand curve to the right, as an increase in the supply of loanable funds, expectations of economic growth, and improvement in business prospects would lead to higher investment and borrowing.

All Else Being Equal,the Demand Curve for Loanable Funds May