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10. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of

O Demand Supply Supply INTEREST RATE (Percent) Demand LOANABLE FUNDS (Billions of dollars)

Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earShift the appropriate curve on the graph to reflect this change. This causes the interest rate to the level of investment spe\

**each option is fall or rise // or increase or decrease

*** causes the gov to run a budget SURPLUS or Deficit (options)

**** last they want the graph curve shifted to reflect Scenario 3

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Answer #1
  1. Sunario 3 This change, budget af spending which causes... ... durnases national Saving Interat / Supply 2 - Supply nat DemandNew supply all increase Scenesio 2: Repeal of investment tax credit New Demand fall , decrease
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