Chapter 29, Problem 4MCQ

To determine

Determinants that will increase the supply of loanable funds.

Explanation of Solution

Families' ability to borrow and save money through a green economic system ensures steady financial development over the long term. By creating new businesses and investing in new initiatives, the capacity to effectively redirect money from lenders to borrowers will subsequently be utilized for value-added investments, creating more employment, goods, and services for the population. All of these exchanges between savers and borrowers happen on the credit market, one of the most significant financial marketplaces in the economy. In this market, borrowers and savers interact to trade loan funds.

The interest rate is the cost at which the trade is conducted. On the other hand, households "offer" the supply of funds that may be borrowed in return for a percentage of their income that has been saved, i.e., Interest Paid on Money Used People who have extra money on hand and choose to spend it or lend it are new sources of available borrowing capital. You may apply for this loan immediately. when households directly or indirectly acquire bonds from firms. B. When a family gives money to a bank, the bank lends the money out. Money is moved from households to enterprises in both cases.

The amount of loanable money will increase as private saving rates rise.

Hence, the correct option is A.