Suppose Many Businesses Want to Increase Their Stock of Capital

question 7

Multiple Choice

Suppose many businesses want to increase their stock of capital goods and decide to borrow funds to do it.Which would be the likely result of this event?

• A)Interest rates would increase.
• B)Interest rates would decrease.
• C)The equilibrium quantity of loanable funds would decrease.
• D)The equilibrium quantity of loanable funds would remain unchanged.Difficulty: 01 Easy

---

Definitions:

Agreement

A mutual understanding or arrangement between two or more parties outlining terms and conditions for a specific purpose.

Payee

The party in a financial transaction who receives payment.

Certificate Of Deposit

A savings certificate entitling the bearer to receive interest, representing a time deposit with a bank or financial institution that has a fixed maturity date.

Time Deposit

A bank deposit with a fixed term or period of maturity, often offering higher interest rates than regular savings accounts.