Suppose that because of a rising price level, consumers start carrying more of their wealth as cash, in order to carry out transactions, and thus are…

Suppose that because of a rising price level, consumers start carrying more of their wealth as

cash, in order to carry out transactions, and thus are less willing to put their wealth into other

assets – such as stocks or bonds. Depict the effect this will have on the market for loanable funds,

and explain what will happen to both interest rates and investment.