According to the loanable funds theory, equilibrium interest rates and quantity of funds are the result of matching supply and demand for funds (see the figure).

Suppose that an improving economy shifts both the supply curve and the demand curve. What can you say about the new equilibrium interest rate and quantity of funds?

Group of answer choices

Both the equilibrium quantity and the equilibrium interest rate will increase

The equilibrium quantity decreases while the equilibrium interest rate can either increase or decrease.

The equilibrium quantity increases and the equilibrium interest rate can either increase or decrease

The equilibrium interest rate increases while the equilibrium quantity can either increase or decrease.