It is argued that one of the weaknesses of the loanable funds approach is that a final equilibrium interest rate cannot be determined.Which of the following statements supports this argument?
A) An equilibrium interest rate will affect savings at that level, which will affect the loanable funds demand curve.
B) Dishoarding of loanable funds will continue for successive periods.
C) In the loanable funds approach, the supply and demand curves are interdependent.
D) Changes in the money supply in one period need to be matched in ensuing periods.

Question

Quizplus · Accepted Answer

The Answer of It is argued that one of the weaknesses of the loanable funds approach is that a final equilibrium interest rate cannot be determined.Which of the following statements supports this argument?
A) An equilibrium interest rate will affect savings at that level, which will affect the loanable funds demand curve.
B) Dishoarding of loanable funds will continue for successive periods.
C) In the loanable funds approach, the supply and demand curves are interdependent.
D) Changes in the money supply in one period need to be matched in ensuing periods.

It Is Argued That One of the Weaknesses of the Loanable