Suppose the Interest Rate Increases

question 31

Multiple Choice

Suppose the interest rate increases.Other things constant, how will the loanable funds market be affected?  

• A) The supply of loanable funds curve will shift to the left. 
• B) The supply of loanable funds curve will shift to the right. 
• C) The quantity of loanable funds supplied will increase. 
• D) The quantity of loanable funds demanded will increase.

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Definitions:

Equilibrium Quantity

The level of output at which demand and supply in the market balance perfectly, setting the stage for stable prices unless external factors intervene.

Demand Schedule

A table or graph showing the quantity of a good that consumers are willing to purchase at various prices.

Supply Schedule

A table or graph that shows the quantity of goods that producers are willing and able to supply at various prices over a specified period.

Equilibrium Price

The market price at which the quantity of a good supplied is equal to the quantity demanded.