Question

Which of the following is a true statement? Question 9 options: when making decisions about saving and borrowing, people care about the nominal interest rate Profit-maximizing firms will borrow to fund an investment if and only if the expected return on the investment is equal to the interest rate on the loan a falling interest rate will lead to a movement along the demand curve for loanable funds If the rates of return on fine art purchases fall, savers will be more inclined to put their savings into art as an investment Quizlet

Answer 1

Answer:

A falling interest rate will lead to a movement along the demand curve for loanable funds

Explanation:

A movement along the demand curve for a good or service is caused by a change in the price of the good or service.

Because the interest rate is the price of the loanable funds, a falling interest rate will cause a movement along the demand curve for loanable funds. More specifically, a falling interest rate, in other words, a lower price, will increase the demand for the loanable funds, so the movement will be upwards.