The substantial decline in interest rates during the credit crisis is attributed to which of the following changes in the market for loanable funds?
A) a. an increase in both the supply of and the demand for loanable funds
B) a. a decrease in both the supply of and the demand for loanable funds
C) a. a decrease in the supply of loanable funds and an increase in the demand for loanable funds
D) a. an increase in the supply of loanable funds and a decrease in the demand for loanable funds

Question

Quizplus · Accepted Answer

During the credit crisis, there was an increase in the supply of loanable funds due to monetary policy actions and a decrease in demand as businesses and consumers were less willing to borrow, leading to lower interest rates.

The Substantial Decline in Interest Rates During the Credit Crisis