Which one of the following will occur during an increase in the supply of loanable funds?

Question

Quizplus · Accepted Answer

An increase in the supply of loanable funds will lead to a decrease in interest rates since there is more money available to lend, increasing competition among lenders and driving down the cost of borrowing. Option B is incorrect because an increase in the supply of loanable funds means that there is more money available to lend, which would increase the money supply in the economy. Option C is incorrect because insured deposit amounts are determined by government policy and are not directly affected by changes in the supply of loanable funds. Option D is incorrect because an increase in the supply of loanable funds would generally require either an increase in savings or a decrease in investment, so the saving rate in the economy would not decrease.

Which One of the Following Will Occur During an Increase