Other things the same,if the interest rate falls,then
A)firms will want to borrow more,which increases the quantity of loanable funds demanded.
B)firms will want to borrow less,which decreases the quantity of loanable funds demanded.
C)firms will want to borrow more,which increase the quantity of loanable funds supplied.
D)firms will want to borrow less,which decreases the quantity of loanable funds supplied.

Question

Quizplus · Accepted Answer

According to the theory of loanable funds, a fall in interest rates will encourage firms to borrow more as borrowing becomes cheaper. This will increase the quantity of loanable funds demanded, as firms will be willing to take out more loans at the lower interest rate.

Other Things the Same,if the Interest Rate Falls,then