The Loanable Funds Theory of Interest Shows That Interest Rates

question 66

Multiple Choice

The loanable funds theory of interest shows that interest rates on loans are determined by

• A) the amount of money supply that the government has pumped into the economy.
• B) agreement, explicit or tacit, among the bank lending officers.
• C) supply and demand for funds available for lending.
• D) government analysts and government regulation.

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Definitions:

Declining Ratings

A situation where the popularity or approval ratings of an entity, such as a TV show or a political figure, decrease over time.

Profitable

Generating revenue in excess of costs and expenses, resulting in a financial gain.

Past Cash Flows

Historical records of the movement of money into and out of a business, used for analyzing the company's financial health.

Security's Value

The market value or price at which a financial security is traded on the market, determined by factors such as a company's profitability, growth potential, and overall economic conditions.