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The inference that (A) is asking test takers to draw is that not only will lenders raise interest rates on loans to potential borrowers who may default without consequence, but in fact either limit or refuse to lend to them at all. While the third paragraph that discusses the expansion of the English and French empires makes no explicit reference to loan limits, the end of the fourth paragraph mentions that after Parliament took power over the Crown's budget in England, the Crown's "borrowing increased and interest rates fell." (Line 47)
From this we can infer that before the Glorious Revolution, and thus within the scope of "the absence of limitation on the legal power of English and French monarchs in the seventeenth and eighteenth centuries" that the monarchs had difficulty financing the expansion of the empire because lenders were reluctant to lend to them, as the monarchs could and would repudiate their debt at will.
(E) is half supported by the passage, as it discusses the Glorious Revolution and Parliament's taking control of Crown finances, including loan guarantees. But it says nothing about what was happening in France during this time or whether French monarchs "were forced to demonstrate a willingness to respect property rights." Be wary of allowing any outside knowledge of the French Revolution seep into the answer, despite it fitting within the timeframe; we are looking only for what must be true according to the passage, nothing else.
Hope this clears things up!