Final answer:
An increase in demand for loans can raise interest rates unless there is also a rise in supply, which can lead to more loans being made and received and potentially lower interest rates. Hence, the correct answer is option (d).
Step-by-step explanation:
In the financial market, certain changes can significantly impact the quantity of loans made and received as well as interest rates. An increase in the demand for loans usually indicates that more borrowers are seeking loans, which can drive interest rates up if the supply of loans does not simultaneously increase.
On the other hand, an increase in the supply of loans, meaning that lenders are willing to offer more loans, can lead to an increase in the quantity of loans made and received as it becomes easier for borrowers to obtain loans. Furthermore, if the supply of loans increases without a corresponding increase in demand, this can lead to a decline in interest rates, as lenders may lower rates to attract borrowers.
There is a direct relationship between the supply and demand for loans and the prevailing interest rates in the market. Specifically, a rise in demand can lead to higher interest rates due to competition for limited resources, whereas a rise in supply often results in a greater volume of lending and potentially lower interest rates to entice borrowers.