In the market for loanable funds, suppose the current interest rate is 5%. At a rate of 5%, investors wish to borrow $100 million and savers wish to save $125 million. We would expect: a the interest rate to fall as there is currently a surplus of loanable funds. b the interest rate to rise as there is currently a shortage of loanable funds. c the interest rate to remain the same as the loanable funds market is in equilibrium. d the interest rate to rise as there is currently a surplus of loanable funds. e the interest rate to fall as there is currently a shortage of loanable funds.
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