If the quantity of loanable funds supplied is less 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

When the quantity of loanable funds supplied is less than the quantity demanded, there is more demand for loans than there are funds available, leading to a shortage. This shortage will result in an increase in the interest rate as lenders try to attract more funds from savers. Therefore, choice B is the best answer.

If the Quantity of Loanable Funds Supplied Is Less Than