Use the following diagram to answer the following questions.
-Refer to Loanable Funds. Suppose the demand for loanable funds is initially D₁ and the supply of loanable funds is S. If the interest rate is currently greater than i₁, then:
A) the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded, and the interest rate will rise.
B) the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied, and the interest rate will decrease.
C) the quantity of loanable funds supplied exceeds the quantity of loanable funds demanded, and the interest rate will decrease.
D) the quantity of loanable funds demanded exceeds the quantity of loanable funds supplied, and the interest rate will increase.
Correct Answer:
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