According to loanable funding theory, the net suppliers of funds are ____________?
Correct answer: D. households
- A. insurance companies
- B. government
- C. corporations
- D. households
Explanation
Households are generally the main net suppliers of loanable funds because they save more than they borrow. Corporations and governments are typically net demanders of funds, while insurance companies act as intermediaries.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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