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.
D
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Everything else held constant, a decrease in government spending will cause the IS curve to shift to the ________ and aggregate demand will ________
A) right; increase B) right; decrease C) left; increase D) left; decrease
If the central bank follows a monetary policy in which it maintains a fixed interest rate, then
a. the LM curve will get steeper. b. the IS curve will get steeper. c. the LM curve will become vertical. d. the LM curve will become horizontal. e. none of the above.