The Current Nominal Interest Rate Is 9 Percent

Multiple Choice

The current nominal interest rate is 9 percent. If the expected inflation rate changes from 2 to 3 percent (ceteris paribus) , it follows that the demand for loanable funds will

A) rise by more than the supply of loanable funds will rise.
B) will rise by less than the supply of loanable funds will fall.
C) will fall by more than the supply of loanable funds will rise.
D) rise by the same amount that the supply of loanable funds will rise.
E) none of the above