Question

After a devastating hurricane, households try to secure loans to repair and rebuild. Other things equal, this would lead toan increase in interest rates of home repair loans as the demand for those loans increased.an increase in interest rates of home repair loans as the demand for those loans increased.an increase in interest rates of home repair loans as the supply for those loans decreased.an increase in interest rates of home repair loans as the supply for those loans decreased.a decrease in interest rates of home repair loans as the supply for those loans increased.

Answer 1

Answer:

Other things equal, this would lead to:

an increase in interest rates of home repair loans as the demand for those loans increased.

Explanation:

With an increase in the demand for house repair loans, as a result of the devastation wrought by the hurricane, the rate of interest on loans normally increases with demand.  The concept of scarcity of loanable funds (or limited resources) is the root cause of this increase in house loan rate. The reverse becomes the case when there is a decrease in demand.