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- Subject
- Financial Markets and Fundsfinance-mcqs › financial-markets-and-funds
- Published
- 12 May 2023
- Last updated
- 28 May 2026
Explanation
When the interest rate is set below the equilibrium level, the demand for loanable funds exceeds the supply, resulting in a shortage of funds in the financial system.
More Financial Markets and Funds MCQs
Practice related questions from the same subject.
- 1.How does a rise in the equilibrium interest rate affect restrictiveness under other non-price factors?
- 2.What does it indicate when companies begin to finance their investments using internally generated funds?
- 3.Loans taken for purchasing vehicles and household appliances fall under which category of goods?
- 4.What term describes the total accumulation of previous budget deficits over time?
- 5.Which category do plant and equipment belong to?
- 6.What occurs in the financial market when the interest rate exceeds the equilibrium borrowing rate for loanable funds?
- 7.When the equilibrium interest rate rises, how does the movement along the supply of funds curve manifest?
- 8.What type of relationship must exist between the supply and demand of funds to ensure there is no shortage of funds?
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