Answer
C. Demand, Up
Work Step by Step
1. If the business community becomes more optimistic about the profitability of capital, the capital investment increases in the market
2. Increase in capital investment drives up the demand for the loanable funds in the market, thus, shifting the demand curve
3. As the demand for the loanable funds increases while the supply being constant, the Interest rate goes up to bring the market to equilibrium
