The monetary expansion increases and gives way to a decrease in equilibrium interest rate, then supply curve of funds must shift ___________?
Correct answer: D. down and to the right
- A. up and to the left
- B. up and to the right
- C. down and to the left
- D. down and to the right
Explanation
An increase in monetary expansion adds funds to the financial system, shifting the supply curve to the right. This is represented by a downward and rightward shift and normally lowers the equilibrium interest rate.
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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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