Question

Kathleen is considering expanding her dress shop. If interest rates rise she is Group of answer choices less likely to expand. This illustrates why the supply of loanable funds slopes downward. more likely to expand. This illustrates why the supply of loanable funds slopes upward. less likely to expand. This illustrates why the demand for loanable funds slopes downward. more likely to expand. This illustrates why the demand for loanable funds slopes upward. None of the options is correct.

Answer 1

Answer:

Less likely to expand.

Explanation:

When ever interest rates rise in an economy, the soul purpose of that is to control inflation by influencing the people to save more and consume/spend less.

Hence, when the interest rates will rise, Kathleen will be moving away from the expansion process as she will have to borrow the money at more cost than before, hence increasing the risk of return from the expansion process. Hence this will lead to the demand for loan-able funds to slope downwards.

Hope this helps you. Good Luck.