Other things the same,an increase in the interest rate makes the quantity of loanable funds supplied
A)rise,and investment spending rise.
B)rise,and investment spending fall.
C)fall,and investment spending rise.
D)fall,and investment spending fall.

Question

Quizplus · Accepted Answer

An increase in interest rates makes savings more attractive to individuals and investors, leading to an increase in the quantity of loanable funds supplied. However, higher interest rates increase the cost of borrowing, which reduces the demand for loanable funds and investment spending. Therefore, the increase in the quantity of loanable funds supplied is offset by a decrease in investment spending, resulting in a rise in the quantity of loanable funds supplied and a fall in investment spending.

Other Things the Same,an Increase in the Interest Rate Makes