Graphically illustrate the effect on the equilibrium, Financial Management

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Graphically illustrate the effect on the equilibrium

Suppose people expect stock prices to increase substantially in the near future.

1. What would be the major effect?

Increase in demand for loanable funds

Decrease in demand for loanable funds

Increase in supply of loanable funds

Decrease in supply of loanable funds

Why?

2. Graphically illustrate the effect on the equilibrium interest rate and quantity of loanable funds.

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Financial Management: Graphically illustrate the effect on the equilibrium

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Financial Management: Graphically illustrate the effect on the equilibrium

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