Real interest rate Loanable funds Loanable funds demanded supplied (trillions of 2009 dollars) (percent per year) 456 7.5 6.5 7.0 7.0 6.5 7.5 7 6.0 8.0 8 5.5 8.5 9 5.0 9.0 10 4.5 9.5

Q: In an economy, the desired consumption and investment functions are given by, cd = 4500+ 0.20Y-4000r…

A: Cd = 4500 + 0.2Y - 4000rId = 2400 - 5000rG= 2100

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