Ask Question
10 January, 12:07

The demand curve for loanable funds slopes: upward since it takes a higher rate of return to get more funds. upward because higher rates of return are necessary to cover higher costs. downward because more potential projects yield 10% than yield 5%. downward because quantity demanded is lower when the price to borrow money is higher.

+5
Answers (1)
  1. 10 January, 15:09
    0
    downward because quantity demanded is lower when the price to borrow money is higher.

    Explanation:

    In this scenario, loanable funds will be treated like other commodities in the market. As per the law of demand, demand for a product is inversely related to its price. An increase or decrease in price results in demand moving in the opposite direction. A demand curve represents the relationship between demand and price. It is downward sloping and shows the quantity demanded at various prices.

    The interest rate is the price of a loan. It is the cost of borrowing money. A high-interest rate makes a loan expensive, thereby discouraging borrowers from borrowing. At Low-interest rates, loans become affordable and attractive to firms and households. Lenders are likely to issue more loans when interest rates are low.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The demand curve for loanable funds slopes: upward since it takes a higher rate of return to get more funds. upward because higher rates of ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers