A local business owner anticipates an economic downturn and decides to postpone a planned expansion that would require a substantial loan. How does this decision likely impact the loanable funds market, and which category does it best represent?

When a business owner decides to postpone an expansion that needs a big loan, it affects the loanable funds market because there is less demand for loans. In this market, people and businesses borrow money, and lenders provide it. Since this business won't be borrowing as much, the overall demand for loans decreases. This situation is an example of a decrease in demand in the loanable funds market. For instance, if the business planned to borrow $100,000 for the expansion but now chooses not to, it means lenders will have less money tied up in loans and may lower interest rates to attract more borrowers.