Figure 8-4. On the horizontal axis of the graph, L represents the quantity of loanable funds in billions of dollars.
-Refer to Figure 8-4. If the equilibrium quantity of loanable funds is $50 billion and if the equilibrium nominal interest rate is 8 percent, then
A) there is an excess supply of loanable funds at a real interest rate of 6 percent.
B) there is an excess demand for loanable funds at a real interest rate of 8 percent.
C) the rate of inflation is approximately 2 percent.
D) the rate of inflation is approximately 14 percent.
Correct Answer:
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