Using a demand-supply diagram for loanable funds (like Exhibit 11), show what happens to the nominal interest

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Using a demand-supply diagram for loanable funds (like Exhibit 11), 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 2 percent to 4 percent.Nominal interest rate 0 S' S D D' Loanable funds per period

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