How would each of the following events to affect the level of interest rates? Sketch demand and supply diagrams of the market for lending and borrowing to illustrate your answers. Also, for each answer say whether crowding out is likely to be a problem. 1. the budget surplus increases 2. the budget deficit increases and contractionary monetary policy is implemented 3. the budget deficit increases and expansionary monetary policy is implemented

5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) Customize and control Google Chrome Supply Demand Supply Demand LOANABLE FUNDS (Billions of dollars) Scenario 1: Individual Retirement Accounts (IRAS) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year. INTEREST RATE (Percent)

Do number 4

Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

3. Discussion questions 1. Why does the United States enforce the legal limit on how much money the federal government can borrow? 2. The U.S. Federal Reserve is independent from the government. Do you think this independence exacerbates or helps to mitigate the budgetary problems of the federal government? 3. Is there any risk of printing more dollars to help finance the federal debt? Explain. 4. How is the national debt affected by a government budget surplus? Why isn't this always a feasible solution to reducing the national debt? To complete this assignment, select the following radio button. I have read the discussion questions on this page and am finished with this analysis.

15.) What causes the basic changes to overall supply and demand for money and loanable funds?

7. Study Questions and Problems #7 Suppose the federal government has no national debt and spends $200 billion, while raising only $50 billion in taxes. To finance the deficit, the U.S. Treasury must issue S billion in government bonds. Next year, assume tax revenues remain at $50 billion, and government spending remains $200 billion plus the interest payment it makes on the government bonds issued to finance the deficit in the first year. If the government pays a 10% rate of interest, the debt-servicing interest payment that needs to be added to the government's $200 billion expenditure for goods and services in the second year is S billion. Then the deficit in the second year is S is $ billion. billion, the amount of new debt issued is 5 billion, and the new national debt

The current market rate of interest is 10 percent. At that rate of interest, businesses borrow $300 billion per year for investment and consumers borrow $50 billion per year to finance purchases. The government is currently borrowing $150 billion per year to cover its budget deficit. a. Derive the market demand for loanable funds, and show how investors and consumerswill be affected if the budget deficit increases to $250 billion per year. Draw a graphto show your conclusion. b. Assuming taxpayers do not anticipate an increase in the future market rate of interestdue to the increase in budget deficit, show the impact of the increase in the budget deficit on the market for loanable funds. c. How would your conclusion differ if taxpayers fully anticipate future tax increases to offset the increase in the budget deficit? d. Do you think the Ricardian Equivalence is realistic?

5. The market for loanable funds and government policy The following graph shows the loanable funds market. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Consider each scenario separately by returning the graph to its starting position when moving from one scenario to the next. (Note: You will not be graded on any changes you make to the graph.) INTEREST RATE (Percent) Supply LOANABLE FUNDS (Billions of doll Demand -0- Demand 10 Supply