Final answer:
The law of supply dictates that an increase in the price of a product results in an increase in supply (Option D). In the financial markets, an increase in the supply of funds will lead to a decline in interest rates and an increase in the quantity of loans made and received.
Step-by-step explanation:
The correct answer based on the law of supply is D. An increase in the price of a product will result in an increase in supply. This is because as prices rise, it becomes more profitable for producers to increase the quantity of the product they supply to the market. Conversely, a decrease in price usually results in a decrease in supply, as it becomes less profitable for producers to sell their products.
Regarding the changes in the financial market that would lead to a decline in interest rates, the correct answer is C. A rise in supply. When there is an increase in the supply of money or credit in the financial market, it generally leads to lower interest rates as lenders are competing to loan out their money to borrowers. Equally, in the context of an increase in the quantity of loans made and received, the answer is also related to a rise in supply of credit (C. a rise in supply) which facilitates more borrowing and lending activities at potentially lower interest rates.