The basic price that equates the demand for and supply of loanable funds in the financial markets is the __________:
A)interest rate
B)yield curve
C)term structure
D)cash price
E)none of the above

Question

Quizplus · Accepted Answer

The basic price that equates the demand for and supply of loanable funds in the financial markets is the interest rate. The interest rate is the cost of borrowing money and the return on lending money, which is determined by the demand for and supply of loanable funds. As the demand for funds increases, the interest rate rises, and as the supply of funds increases, the interest rate falls. Therefore, the interest rate is the best choice that meets the requirement of the question.

The Basic Price That Equates the Demand for and Supply