Draw a graph of the market for loanable funds in
a closed economy. Show the effect on the equilibrium
real interest rate and quantity of funds loaned
and borrowed of each of the following events:
a. Consumers decide to spend less.
b. The government decreases its spending.
c. Businesses become pessimistic about future
profitability.
d. The government’s budget deficit increases,
and at the same time, investment in new
capital goods becomes more profitable.