Firms expect more sales and profits in the near future; this would cause

Question

Quizplus · Accepted Answer

When firms expect more sales and profits in the near future, they may seek to invest in expanding their operations or purchasing new equipment, which will require borrowing funds. This increased demand for loanable funds will cause the interest rates to increase, thus raising the cost of borrowing for firms. Thus, the demand for loanable funds will increase.

Firms Expect More Sales and Profits in the near Future;