The domestic supply of loanable funds is _____ sloping because _____ respond to lower interest rates by _____ their quantity supplied of loanable funds.

Question

Quizplus · Accepted Answer

The domestic supply of loanable funds is upward sloping because savers respond to lower interest rates by decreasing their quantity supplied of loanable funds. As interest rates fall, savers are less incentivized to save and supply their funds for loan, thus the quantity of loanable funds supplied decreases. As interest rates rise, savers are incentivized to save more and supply more funds for loan, thus the quantity of loanable funds supplied increases.

The Domestic Supply of Loanable Funds Is _____ Sloping Because