• Card 9 / 16: Which of the following changes in the financial market will lead to a decline in interest rates:
    a.) a rise in demand
    b.) a fall in demand
    c.) a rise in supply
    d.) a fall in supply

    Answer:
    b.) a fall in demand
    c.) a rise in supply

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Explanation:

b and c will lead to a fall in interest rates. At a lower demand, lenders will not be able to charge as much, and with more available lenders, competition for borrowers will drive rates down.

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Microeconomics 04 Labor & Financial Markets

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Access: Public

Attribution:  Microeconomics, OpenStax-CNX Web site. Download for free at http://cnx.org/content/col11613/latest
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