Figure 26-4

Multiple Choice

Figure 26-4.On the horizontal axis of the graph,L represents the quantity of loanable funds in billions of dollars.
-Refer to Figure 26-4.If the equilibrium quantity of loanable funds is $50 billion and if the equilibrium nominal interest rate is 8 percent,then

A) there is an excess supply of loanable funds at a real interest rate of 6 percent.
B) there is an excess demand for loanable funds at a real interest rate of 8 percent.
C) the rate of inflation is approximately 2 percent.
D) the rate of inflation is approximately 14 percent.