Figure 4.1
-In Figure 4.1, the most likely cause of the increase in the equilibrium interest rate from i₁ to i₂ is a(n) ________ in the ________.

Question

Figure 4.1 -In Figure 4.1, the most likely cause of the increase in the equilibrium interest rate from i₁ to i₂ is a(n)________ in the ________.

Quizplus · Accepted Answer

An increase in the expected inflation rate would cause an increase in the equilibrium interest rate, as lenders would demand higher interest rates to compensate for the expected loss in purchasing power due to inflation.

Figure 4.1 -In Figure 4.1, the Most Likely Cause of the Increase