The demand for loanable funds increases by the exact same percentage that the supply of loanable funds decreases.This would cause:
A) the equilibrium quantity of loanable funds to decrease and the equilibrium interest rate to increase.
B) the equilibrium quantity of loanable funds to increase and the equilibrium interest rate to decrease.
C) the equilibrium quantity of loanable funds to increase, but the effect on the equilibrium interest rate would be uncertain.
D) the equilibrium interest rate to increase, resulting in a new higher equilibrium quantity.
E) the equilibrium interest rate to increase, but the equilibrium quantity would remain unchanged.
Correct Answer:
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