If the demand for loanable funds shifts to the right,then initially there is a
A)surplus so the interest rate will fall.
B)surplus so the interest rate will rise.
C)shortage so the interest rate will fall.
D)shortage so the interest rate will rise.

Question

Quizplus · Accepted Answer

An increase in demand for loanable funds leads to a shortage of funds available for borrowing. As a result, lenders can charge higher interest rates to borrowers to make up for the increased demand. Therefore, initially, the interest rate will rise.

If the Demand for Loanable Funds Shifts to the Right,then