All other things unchanged, an increase in demand for loanable funds would most likely be caused by a(n):

Question

Quizplus · Accepted Answer

An increase in government borrowing would increase the demand for loanable funds because the government would need to borrow more money to finance its spending or investment projects. This would lead to an increase in the overall demand for loanable funds in the market. A decrease in expected business opportunities (choice A) would discourage firms from borrowing and investing in new projects, leading to a decrease in the demand for loanable funds. An increase in the market interest rate (choice B) would discourage borrowing and investment, also leading to a decrease in the demand for loanable funds. An increase in corporate income tax rates (choice C) would affect the supply of loanable funds by reducing the after-tax return on savings for investors, but it would not directly affect the demand for loanable funds.

All Other Things Unchanged, an Increase in Demand for Loanable