Which of the following would best explain an increase in the equilibrium interest rate and equilibrium quantity of loans made?
A) A decrease in excess reserves.
B) An increase in excess reserves.
C) A decrease in the demand for loans.
D) An increase in the demand for loans.

Question

Quizplus · Accepted Answer

An increase in the demand for loans would lead to a higher equilibrium interest rate and a higher equilibrium quantity of loans, as more borrowers are willing to pay higher rates to obtain loans.

Which of the Following Would Best Explain an Increase in the Equilibrium