Figure 26-5.Figure 26-5 shows the loanable funds market for a closed economy. 
-Refer to Figure 26-5.Starting at point A,a reduction in government spending would cause
A) the quantity of loanable funds traded to increase to $125 and the interest rate to rise to 7% (point C) .
B) the quantity of loanable funds traded to decrease to $75 and the interest rate to fall to 5% (point B) .
C) the quantity of loanable funds traded to increase to $125 and the interest rate to fall to 5% (point D) .
D) the quantity of loanable funds traded to decrease to $75 and the interest rate to rise to 7% (point E) .
Correct Answer:
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