Assume That a Credit Crisis Causes a Weak Economy, and the Fed

Multiple Choice

Assume that a credit crisis causes a weak economy, and the Fed increases money supply. These conditions should cause

A) an increase in both the supply of and the demand for loanable funds.
B) a decrease in both the supply of and the demand for loanable funds.
C) a decrease in the supply of loanable funds and an increase in the demand for loanable funds.
D) an increase in the supply of loanable funds and a decrease in the demand for loanable funds.