Interest rates are determined by the supply of and demand for
A) financial services.
B) loanable funds.
C) currency.
D) consols.

Question

Quizplus · Accepted Answer

Interest rates are determined by the supply of and demand for loanable funds. When the demand for loanable funds is high, the interest rates increase and when there is a surplus of loanable funds, the interest rates decrease. The supply and demand for financial services may affect interest rates indirectly, but they are not the primary determinant. Currency and consols are not directly related to the determination of interest rates.

Interest Rates Are Determined by the Supply of and Demand