Please answer everything in the photos. The following graph shows the loanable funds market. For each of the given scenarios, adjust the appropriate curve on the graph to help you completethe 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)LOANABLE FUNDS (Billions of dollars)SupplyDemandOmaDemand-Supply Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or depositsis taxed at a rate of 18%. Now suppose there is a decrease in the tax rate on interest income, from 18% to 14%.Shift the appropriate curve on the graph to reflect this change.This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds tospending toScenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital within some relevant time period. Supposethe government repeals a previously existing investment tax credit.Shift the appropriate curve on the graph to reflect this change.The repeal of the previously existing tax credit causes the interest rate toThis change in spending causes the government to run a budgetScenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changingtaxes.Shift the appropriate curve on the graph to reflect this change.and the level of saving toThis causes the interest rate towhichand the level of investmentthe level of investment spending.national saving.

Loanable Funds Market: In the market for loanable funds there are economic agents like governments,…

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) LOANABLE FUNDS (Billions of dollars) Supply Demand Demand Supply

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) LOANABLE FUNDS (Billions of dollars) Supply Demand Demand Supply

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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