Answer :
Demand for loanable funds will increase; stock of capital will increase.
Changes within the demand for loanable funds, That means the demand for loanable funds will increase, which results in the next real charge per unit. In other words, we might expect to determine a rise in real interest rates, and therefore the quantity of loans made, when the economy is doing well.
When there's a decrease in loans, credit, and borrowing by consumers and firms, we'll see the demand for loanable funds decrease. The lower the charge per unit, the more capital firms will demand. The more capital that firms demand, the greater the funding that's required to finance it.
Economic process will increase the demand for loanable funds during a country. The demand for loanable funds is decreasing because the rate of interest increases. From the purpose of view of a borrower (the source of demand within the loanable funds framework), as interest rates increase, the price of borrowing goes up and also the person (or business) is a smaller amount likely to borrow.
When the relative demand for loanable funds increases, the rate of interest goes up. When the relative supply of loanable funds increases, the rate declines.
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