If an economic expansion in the economy caused an increase in the demand for loanable funds. The interest rate would increase and the quantity of funds loaned in the credit market would also increase.
For a business to function and expand, it needs money. A company can borrow money if it has a track record of generating income or, even better, generating profits. Bonds and banks are the two main ways that businesses borrow money. A bond is another way to raise money. A bond is a type of financial contract that is similar to a loan but differs in two ways: first, bonds often have lower interest rates than loans do, and second, there are established secondary markets for bonds, which gives bondholders greater liquidity than they would with loans. Major enterprises and various levels of government both issue bonds. For instance, the federal government borrows money when the U.S. Department of the Treasury issues Treasury bonds, states borrow money when they issue state bonds, and cities borrow money when they issue municipal bonds.
A bank loan for a business operates much like a loan for an individual purchasing a home or automobile. The business takes out a loan and pledges to pay it back over a specified length of time, together with interest. The bank (or banks) may sue the company in court and order it to sell its property or equipment to recoup its debt if it fails to make loan payments.
To know more about Expansion visit:
https://brainly.com/question/2614672
#SPJ4
