Suppose investment tax incentives increase AND the government deficit decreases (assume each curve shifts the same amount). So 10 8 2 D. 200 400 600 800 1000 1200 LOANABLE FUNDS (BILLIONS) 1) Using the graph above as a guide, which way would the Supply and/or Demand curve(s) shift? It can shift Supply, Demand, both, or neither. 2) Approximate the new equilibrium. (You may need scratch paper). What is the new equilibrium interest rate AND amount of loanable funds available? REAL INTEREST RATE (%)

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