An increase in the demand for loanable funds may be caused by a(n)

Question

Quizplus · Accepted Answer

An increase in business borrowing would lead to an increase in the demand for loanable funds since businesses would need more funds to invest in their operations. An increase in the availability of loanable funds (choice A) would lower the interest rate and lead to an increase in the supply of loanable funds, not the demand. An increase in consumers' willingness to save (choice B) would lead to an increase in the supply of loanable funds, not the demand. A decrease in the interest rate (choice D) would lower the cost of borrowing and increase the demand for loanable funds, but it is not the only factor that could cause an increase in demand.

An Increase in the Demand for Loanable Funds May Be