As a Government Adopts an Expansionary Fiscal Policy

Multiple Choice

As a government adopts an expansionary fiscal policy:

A) the demand for loanable funds increases causing interest rates to rise.
B) the demand for loanable funds decreases causing interest rates to fall.
C) the supply of loanable funds increases causing interest rates to rise.
D) the supply of loanable funds decreases causing interest rates to fall.
E) neither the supply nor the demand for loanable funds changes.