Question

Elmira Tool and Die make machine tools to order. The following transactions occurred in October:

A) Increased production costs
B) Decreased demand for tools
C) Expansion of the product line
D) Financial transactions with customers

Answer 1

An increase in the supply of funds in the financial market leads to an increase in the quantity of loans made and received, as lenders have more resources available for borrowing.

Step-by-step explanation:

The question pertains to the financial market and the factors that can lead to an increase in the quantity of loans made and received. In the context of supply and demand within the market for loans, an increase in demand for loans means that more businesses or individuals want to borrow money.

An increase in supply occurs when lenders are willing to provide more funds for loans. Looking at how markets work, an increase in the supply of funds would lead to an increase in the quantity of loans made and received, as more resources are available to be lent out.

Therefore, the correct answer to which change in the financial market will lead to an increase in the quantity of loans is 'a rise in supply' (option C).

Businesses consider these market conditions when they decide to expand or reduce production, set prices, open new factories or sales offices, hire workers or lay them off, and start selling new products or stop selling existing ones.