The demand curve for loanable funds slopes down because
A)at lower bond prices more loanable funds will be supplied.
B)lower interest rates reduce the inflation rate.
C)an increase in the interest rate makes borrowers more willing and able to demand more funds.
D)a decrease in the interest rate makes borrowers more willing and able to demand more funds.

Question

Quizplus · Accepted Answer

A decrease in the interest rate makes borrowers more willing and able to demand more funds because it lowers the cost of borrowing, making it more attractive for businesses and individuals to invest and make purchases using credit. As a result, there is an increase in the quantity demanded of loanable funds, leading to a downward sloping demand curve.

The Demand Curve for Loanable Funds Slopes Down Because