QUESTION 4 Suppose that a resurgence of pandemic concerns leads to business closures that cause a sharp increase in inflation. Based on the supply and demand for loanable funds, which of the following characterizes the change in supply/demand for loanable funds and the expected change in interest rates? (Assume nothing else changes.) O Increase in demand for funds, interest rates increase Decrease in demand for funds, interest rates decrease O Increase in supply of funds, interest rates decrease Decrease in supply of funds, interest rates increase QUESTION 5 Suppose that the term premium is 2 basis points per month of maturity. If the yield curve is flat between 1 year and 5 years, then the short-term interest rate is expected to remain constant over the next 5 years. True or false? O a. True b. False QUESTION 6 Suppose that the spot interest rate on a one-year zero-coupon bond is 196 and the spot interest rate on a two-year zero-coupon bond is 296. Based on the pure expectations theory of the term structure of interest rates, what is the expected one-year interest rate starting in one year. Use the approximation from class