If the quantity of loanable funds supplied is greater than the quantity demanded,then there is a
A)shortage of loanable funds and the interest rate will fall.
B)shortage of loanable funds and the interest rate will rise.
C)surplus of loanable funds and the interest rate will fall.
D)surplus of loanable funds and the interest rate will rise.

Question

Quizplus · Accepted Answer

A surplus of loanable funds means there is more money available for lending than there are borrowers demanding it. This leads to increased competition among lenders to attract borrowers, which drives down the interest rate. Therefore, with a surplus of loanable funds, the interest rate will fall.

If the Quantity of Loanable Funds Supplied Is Greater Than