Question: 19. Inflation and Interest Rates Using a demand-supply diagram for loanable funds (like Exhibit 10), show what happens to the nominal interest rate and the

19. Inflation and Interest Rates Using a demand-supply diagram for loanable funds (like Exhibit 10), show what happens to the nominal interest rate and the equilibrium quantity of loans when both borrowers and lenders increase their estimates of the expected inflation rate from 5 percent to 10 percent.

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