Question

please 3 graphs is needed one for purchasing power of money one for price and the other one for quantity of loanable funds when there is a decrease in the supply of money and credit please read the question carefully

Heading 1 Normal No Spacing Heading 2 Title a DA Case 2: Draw the Purchasing Power of Money, the Price/Quantity and the Quantity-of- Loanable Funds graphs for the case of a decreasing supply of money and credit. 1 Focus English (United States)

Answer 1

Decrease in supply of loanable funds from S to S1 raise rate of interest from "i" to "i1" and reduce loanable funds from L to L1.

chauss 12 114 1

Aggregate demand = Consumption + Investment + Government spending + Exports - Imports

Investment and Interest rate have negative relationship with each other. Rise in rate of interest will reduces investment level which reduces aggregate demand and shift aggregate demand curve to its left which reduce price as well as quantity traded.

Fall in price raise purchasing power of money as the same money can buy more units.