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Suppose the Market for Loanable Funds Is in Equilibrium

Question 99

Multiple Choice

Suppose the market for loanable funds is in equilibrium. If expected profit falls, the equilibrium real interest rate ________ and the quantity of loanable funds ________.


A) falls; decreases
B) falls; increases
C) rises; increases
D) rises; decreases
E) falls; increases or decreases but we don't know for sure

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