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Question: in a different scenario suppose that the demand and supply...

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In a different scenario, suppose that the demand and supply curves for loanable funds shown on the following graph occur when the expected future inflation rate is 5%. Then, a sudden shock to the economy causes the expected future inflation rate to rise to 9.6%. Assuming the Fisher effect holds, show the impact that this will have on the loanable funds market by shifting one or both curves on the following graph Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if you try to move the curve and it snaps back to its original position, just try again and drag it a little farther. NOMINAL INTEREST RATE !Percent) 24 + 20- S5 16 D5 QUANTITY OF LOANABLE FUNDS According to the Fisher effect, a decrease in expected future inflation causes a decrease n the nominal interest rate, and in the expected real interest rate.

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