Question

1. An decrease in a/an __________ account would be considered

a/an _________ of funds. I. asset; source II. liability; source
III. equity; use a. I only b. II only c. I and II only d. I and III
only e

Answer 1

A rise in the supply of funds leads to a decline in interest rates, while a rise in the supply and demand for funds increases the quantity of loans made and received.

Step-by-step explanation:

Interest rates in financial markets are influenced by the balance of supply and demand for funds. A rise in supply of funds generally leads to a decline in interest rates because when there is more money available to lend, lenders will accept lower interest rates. Conversely, a rise in demand for funds without a corresponding increase in supply would lead to higher interest rates because borrowers are competing for a limited amount of funds.

As for the quantity of loans made and received, an increase would most likely be seen if there is either a rise in demand for loans or a rise in supply of funds. When demand for loans increases, it suggests that more borrowers are looking for financing, which could lead to more loans being made. However, without a rise in supply, this could also lead to higher interest rates. If the supply of funds increases, assuming demand remains constant, there will be more funds available for loans, increasing the total quantity of loans made and received while possibly lowering interest rates.