Question

Other things the same, if the interest rate falls, then a. firms will want to borrow more, which increases the quantity of loanable funds demanded.

Answer 1

Answer: (a).

Annexure: Since a part of the information was found missing in the question, a similar question has been provided as an attachment for reference.

If the interest rate falls with other things remaining constant, a firm would like to raise more money via debt instruments.

This will lead to an increase in the quantity of loanable funds demanded.

This would further lead to increase in the level of invested funds by the public as it would get cheaper for the corporates to avail loans.