The equilibrium interest rate and quantity of loanable funds

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Suppose people expect stock prices to increase substantially in the near future.

1. What would be the major effect?

                  Increase in demand for loanable funds            

                  Decrease in demand for loanable funds  

                  Increase in supply of loanable funds  

                  Decrease in supply of loanable funds  

Why?

2. Graphically illustrate the effect on the equilibrium interest rate and quantity of loanable funds.

Reference no: EM132025454

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