Q495
Theory which states that interest equilibrium is result of demand and supply in trading market is classified as
A.
saving fund theory
B.
constant funds
C.
borrowed theory
D.
loanable funds theory
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Theory which states that interest equilibrium is result of demand and supply in trading market is classified as loanable funds theory. According to this approach, the interest rate is determined by the demand for and supply of loanable funds. The term loanable funds includes all forms of credit, such as loans, bonds, or savings deposits.