Final answer:
A bank's agreement to lend money upon request to an organization is called a b)line of credit. A rise in both the demand for loans and the supply of loanable funds typically results in an increase in the quantity of loans made and received.
Step-by-step explanation:
The arrangement by which a bank agrees to lend a specified amount of money to an organization upon request is known as a line of credit.
This financial tool allows organizations to borrow money as needed up to a preset limit, providing flexibility to manage their cash flow. On the other hand, when considering how to increase the quantity of loans made and received in financial markets.
Both a rise in demand for loans and a rise in supply of loanable funds would generally contribute to an increase. If there's a higher demand for borrowing, banks may lend more, and if the supply of funds increases.
There will be more capital available to lend. Conversely, a fall in demand or fall in supply would likely decrease the quantity of loans.It's important for a firm to choose the right form of financial capital acquisition.
Borrowing from a bank or issuing bonds creates an obligation to pay interest regardless of income, but allows the firm to maintain control over operations without being accountable to shareholders.
On the contrary, issuing stock sells company ownership and subjects the firm to the oversight of a board of directors and its shareholders.