Question

An increase in the availability of money would lead to which effect?

A) Interest rates would go up.
B) Interest rates would go down.
C) Interest rates would NOT be affected due to RESPA guidelines.
D) Interest rates would NOT be affected due to Truth in Lending.

Answer 1

An increase in the availability of money would lead to a decrease in interest rates.

Step-by-step explanation:

An increase in the availability of money would lead to option B) Interest rates would go down. When there is an increase in the amount of available loanable funds, more people want to lend, which leads to a bidding down of the interest rate. This means that borrowers can obtain loans at lower interest rates, making borrowing more affordable and stimulating economic activities.