A decrease in the supply of loanable funds will lead to a(n) ________ in the interest rate and a(n) ________ in the quantity of capital demanded.

Question

Quizplus · Accepted Answer

A decrease in the supply of loanable funds leads to an increase in the interest rate due to higher costs of borrowing. This, in turn, results in a decrease in the quantity of capital demanded, as higher interest rates make borrowing more expensive and thus reduce the demand for capital.

A Decrease in the Supply of Loanable Funds Will Lead