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17 October, 14:55

If the supply of loanable funds exceeds the demand then borrowers will bid up the interst rate.

True / False.

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Answers (1)
  1. 17 October, 15:22
    0
    False

    Explanation:

    When supply of loanable funds increases, the borrowers have more sources of availing loans. Such a situation leads to a competition among suppliers of loanable funds.

    Thus, to attract borrowers, suppliers have to lower the rate of interest on loans.

    Thus, Borrowers will not bid up the interest rate in such a scenario and would rather bid down the interest rate.
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