a. The supply of loanable funds slopes upward because higher interest rates make it more costly to borrow. savers will make more funds available at lower interest rates. O investors will want more money made available at higher interest rates. savers will make more funds available at higher interest rates. b. The demand for loanable funds slopes downward because O few investment projects yield a high rate of return. O many investment projects yield an equal rate of return. O many investment projects yield a high rate of return. O few investment projects yield a low rate of return. C. The equilibrium interest rate is determined where the interest rate is equal to O the amount of loanable funds. O the expected rate of return. O the expected rate of spending. O expected personal income.
a. The supply of loanable funds slopes upward because higher interest rates make it more costly to borrow. savers will make more funds available at lower interest rates. O investors will want more money made available at higher interest rates. savers will make more funds available at higher interest rates. b. The demand for loanable funds slopes downward because O few investment projects yield a high rate of return. O many investment projects yield an equal rate of return. O many investment projects yield a high rate of return. O few investment projects yield a low rate of return. C. The equilibrium interest rate is determined where the interest rate is equal to O the amount of loanable funds. O the expected rate of return. O the expected rate of spending. O expected personal income.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:### Understanding Loanable Funds
This educational resource explores the concepts related to the supply and demand of loanable funds, as well as the determination of equilibrium interest rates.
#### a. The Supply of Loanable Funds
The supply of loanable funds slopes upward because:
- Higher interest rates incentivize savers to make more funds available.
- (✓) Savers will make more funds available at higher interest rates.
#### b. The Demand for Loanable Funds
The demand for loanable funds slopes downward because:
- (✓) Few investment projects yield a high rate of return.
#### c. Equilibrium Interest Rate
The equilibrium interest rate is determined when the interest rate is equal to:
- (✓) The expected rate of return.
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