Final answer:
An increase in the demand for loanable funds may be caused by a rise in demand or a rise in supply in the financial market. When more people want to borrow and lend, it increases the quantity of loans made and received.
Step-by-step explanation:
An increase in the demand for loanable funds may be caused by a rise in demand or a rise in supply in the financial market.
When more people want to borrow and lend, it increases the quantity of loans made and received.
This leads to a higher availability of funds and a decrease in the interest rate for borrowers.