Question

Which of the following is a true statement?a. when making decisions about saving and borrowing, people care about the nominal interest rateb. 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 loanc. a falling interest rate will lead to a movement along the demand curve for loanable fundsd. If the rates of return on fine art purchases fall, savers will be more inclined to put their savings into art as an investment

Answer 1

Answer:

The answer is: C) A falling interest rate will lead to a movement along the demand curve for loanable funds

Explanation:

When you think about a loan, the interest rate is what you pay for getting the loan. So we can assume the interest rate is the price of the loan.

If the interest rates decrease, it is equivalent to a price decrease. Whenever the price of a good or service decreases, the quantity demanded for that good or service increases.