1) Suppose that the government spending decreases. Use the model of loanable funds in a closed economy to explain clearly what happens to the quantity of national savings, public savings, private savings, investment, consumption, and the interest rate: Illustrate the answer with the appropriate graph.

1. I would like for you to identify and explain how a government budget surplus impacts the loanable fund market by explaining which curve(s) moves and which direction. 2. Identify of being a closed economy or an open economy affects the market differently.

The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds. 10 Supply 8 Demand 100 200 300 400 500 600 700 800 900 1000 LOANABLE FUNDS (Billions of dollars) is the source of the supply of loanable funds. As the interest rate falls, the quantity of loanable funds supplied increases v Suppose the interest rate is 4.5%. Based on the previous graph, the quantity of loanable funds supplied is v than the quantity of loans demanded, resulting in a v of loanable funds. This would encourage lenders to v the interest rates they charge, thereby v the quantity of loanable funds supplied and v the quantity of loanable funds demanded, moving the market toward the equilibrium interest rate of 5% . INTEREST RATE (Percent)

PLEASE ANSWER ALL QUESTIONS NOT JUST SOME PLEASE WRITE THE EXACT NUMBERS FOR THE GRAPH. PLEASE READ CAREFULLY, THIS MAY BE A SIMILAR QUESTION, BUT ALL QUESTIONS ARE DIFFERENT

Household time preferences increase (people become less patient). Which of the following graphs correctly shows how the loanable funds market changes? Interest rate Loanable funds market Interest rate Savings/Investments Loanable funds market ☆ Interest rate Loanable funds market # Savings/Investments Savings/Investments Interest rate Loanable funds market Savings/Investments

Show graphically and explain how an increase in household confidence about future income affects the loanable funds market