All other things being equal, a decrease in the demand for loanable funds:Group of answer choicesmight not have any effect on the interest rate.results from an increase in business circumstances and a decrease in the level of savings.drives the interest rate down.drives the interest rate up.

The Reserve Bank increases interest rates to reduce the level of spending in the economy. As the rate of growth in economic activity slows, the demand for funds also slows. This impact of a change in interest rates is described as the:Group of answer choicesmonetary effect.liquidity effect.income effect.inflation effect.

If we think about interest rates as the price of money, thenGroup of answer choicesgreater supply of money will lower interest rates.lower supply of money will raise interest rates.all of these are true.lower demand for money will lower interest rates.greater demand for borrowing will increase interest rates.

A lower interest rate makes more investment projects feasible, meaning that:Group of answer choicesthere is a direct relationship between the rate of interest and the quantity of investment spending.there is an inverse relationship between the rate of interest and the quantity of investment spending.there is no relationship between the rate of interest and the quantity of investment spending.the demand curve for investment spending is horizontal.

An increase in the interest rateA) increases the demand for money.B) increases the quantity of money demanded.C) decreases the demand for money.D) decreases the quantity of money demanded.

A decrease in the supply of loanable funds will __________ interest rates and __________ quantity demanded of loanable funds.Select the correct answer below: