Which of the following occurs if the expected profit increases?
A) Investment demand increases and the demand for loanable funds curve shifts rightward.
B) The quantity of investment demanded decreases and there is a movement up along the demand for loanable funds curve.
C) The quantity of investment demanded increases and there is a movement down along the demand for loanable funds curve.
D) The savings increases and the supply of loanable funds curve shifts rightward.
E) Investment demand decreases and the demand for loanable funds curve shifts leftward.
Question 2
In the figure above, illustrate the effect of an increase in the U.S. interest rate. What is the effect on the foreign exchange rate?
What will be an ideal response?
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