Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A decrease in interest rates
B
An increase in business investment opportunities
C
A decrease in consumer confidence
D
An increase in savings rates
Understanding the Answer
Let's break down why this is correct
Answer
An increase in the demand for loanable funds usually happens when people and businesses want to borrow more money. This can occur when interest rates are low, making it cheaper to take out loans. For example, if a company wants to expand and needs to borrow money to build a new factory, it will seek out loans, increasing the overall demand for funds in the market. Additionally, when consumers feel confident about their financial future, they may take out loans for things like homes or cars, further raising demand. Overall, any situation that encourages borrowing will lead to an increase in the demand for loanable funds.
Detailed Explanation
When businesses see good chances to invest, they want to borrow more money. Other options are incorrect because Some might think lower interest rates mean more borrowing; People might think that low confidence leads to more borrowing.
Key Concepts
demand for loanable funds
Topic
Loanable Funds Market Dynamics
Difficulty
easy level question
Cognitive Level
understand
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