Due to expectations of higher inflation in the future, we would typically expect the supply of loanable funds to ____ and the demand for loanable funds to ____.
A)increase; decrease
B)increase; increase
C)decrease; increase
D)decrease; decrease

Question

Quizplus · Accepted Answer

Higher expected inflation usually leads to a decrease in the supply of loanable funds as lenders anticipate lower real returns. Simultaneously, the demand for loanable funds increases as borrowers seek to lock in current interest rates before they rise.

Due to Expectations of Higher Inflation in the Future, We