Which of the following events would most likely cause the nominal interest rate to fall?
A)A decrease in the supply of loanable funds
B)An increase in the demand for loanable funds
C)An increase in the supply of loanable funds and an increase in the demand for loanable funds
D)An increase in the supply of loanable funds and a decrease in the demand for loanable funds
E)A decrease in the supply of loanable funds and an increase in the demand for loanable funds

Question

Quizplus · Accepted Answer

An increase in the supply of loanable funds and a decrease in the demand for loanable funds would most likely cause the nominal interest rate to fall because the greater availability of funds for lending, combined with reduced demand for borrowing, would put downward pressure on the cost of borrowing, which is reflected in lower interest rates.

Which of the Following Events Would Most Likely Cause the Nominal