If interest rates rise,holding all else constant,this would cause:

Question

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When interest rates rise, it becomes more expensive to borrow money. This increases the opportunity cost of holding money and encourages savers to supply more funds (i.e. increase quantity supplied) while discouraging borrowers from demanding funds (i.e. decrease quantity demanded). As a result, the supply of loanable funds increases while the demand for loanable funds decreases causing an increase in the quantity supplied of loanable funds but a decrease in the quantity demanded of loanable funds.

If Interest Rates Rise,holding All Else Constant,this Would Cause