When consumers and businesses have greater confidence that they will be able to repay loans in the future: Group of answer choices The quantity supplied of financial capital at any given interest rate will shift to the right The quantity demanded of financial capital at any given interest rate will shift to the right The quantity demanded of financial capital at any given interest rate will shift to the left The quantity supplied of financial capital at any given interest rate will shift to the left
When consumers and businesses have greater confidence that they will be able to repay loans in the future: Group of answer choices The quantity supplied of financial capital at any given interest rate will shift to the right The quantity demanded of financial capital at any given interest rate will shift to the right The quantity demanded of financial capital at any given interest rate will shift to the left The quantity supplied of financial capital at any given interest rate will shift to the left
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
When consumers and businesses have greater confidence that they will be able to repay loans in the future:
Group of answer choices
The quantity supplied of financial capital at any given interest rate will shift to the right
The quantity demanded of financial capital at any given interest rate will shift to the right
The quantity demanded of financial capital at any given interest rate will shift to the left
The quantity supplied of financial capital at any given interest rate will shift to the left
Expert Solution
Step 1
The rate of interest is the main reason that determines the quantity of savings and investment in the economy. There is an inverse relationship between the interest rate and investment whereas a direct relation between the savings and interest rate. As the interest rate increases, it will increase the savings rate in the economy whereas the increase in the interest rate leads to a decrease in the investment rate in the economy.
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