Question

Which of the following movements would illustrate the effect in the market for swimming lessons?

a) Increase in demand
b) Decrease in supply
c) Increase in price
d) Decrease in demand

Answer 1

In the financial market, an increase in supply will typically lead to both a decline in interest rates and an increase in the quantity of loans made and received.

Step-by-step explanation:

This question relates to the principles of supply and demand within the financial markets. Specifically, the movements in question involve the supply and demand for loans, as represented by interest rates and the quantity of loans.An increase in supply of money in the financial market, such as from more savings or increased lender willingness, would typically lead to a decline in interest rates, as more money is available for borrowing.

Conversely, an increase in demand for loans without a similar increase in supply would lead to higher interest rates, as more borrowers compete for the same amount of money. Likewise, an increase in supply would lead to an increase in the quantity of loans made and received, as there is more capital available to lend.