An increase in the demand for loanable funds, holding supply constant, will cause interest rates to:

Question

Quizplus · Accepted Answer

An increase in demand for loanable funds means that more people or businesses are seeking to borrow money. This increase in demand will drive up interest rates because lenders can charge more to meet the demand for loans. Therefore, as demand for loanable funds increases, interest rates will increase.

An Increase in the Demand for Loanable Funds, Holding Supply