Final answer:
The marginal cost of financial transactions increases with volume due to congestion. In financial markets, a rise in the supply of money leads to lower interest rates, while a rise in demand and supply increases the quantity of loans made and received.
Step-by-step explanation:
The marginal cost of financial transactions often rises with the volume of financial transactions due to congestion. This is because as more transactions occur, the processing channels can become overburdened, leading to increased costs associated with managing the high volume of transactions. On the other hand, the topic of changes in the financial market affecting interest rates is also important. A rise in the supply of money in the financial market, all else being equal, leads to a decline in interest rates, as excess funds look for borrowers, thereby lowering the cost of borrowing. Conversely, an increase in the quantity of loans made and received is most directly related to both a rise in demand for loans and a rise in supply. Increased demand indicates more borrowers looking for funds, while an increased supply means more funds are available to lend.