If the equilibrium interest rate decreases with respect to decrease in interest rate, then the movement along the supply of funds curve is __________?
Correct answer: B. downside movement
- A. upside movement
- B. downside movement
- C. shift left
- D. shift rightCredit & Lending
Explanation
On an upward-sloping supply-of-funds curve, a fall in the interest rate reduces the quantity of funds supplied, producing a downward movement along the curve. It is not a left or right shift unless another determinant changes.
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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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