3 Questions
What is the impact of high interest rates on household saving?
Households find it worthwhile to save as savings earn more
How do low interest rates affect borrowing by firms for investment projects?
Firms borrow more for investment projects because borrowing is inexpensive
What is the impact of high interest rates on borrowing by firms?
High interest rates discourage firms from borrowing
Test your knowledge of the market for loanable funds, including the impact of interest rates on households' saving decisions and firms' borrowing for investment projects.
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