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Equilibrium quantity of credit would change

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Explain how the equilibrium real interest rate and the equilibrium quantity of credit would change in each of the following scenarios, and illustrate your answer with a well-labeled graph of the credit market. 

a) As the real estate market recovers from the 2007 - 2009 financial crisis, households begin to buy more houses and condominiums. 

b) Congress agrees to a reduction in the federal deficit, which results in a significant decrease in the amount of government borrowing. 

c) Households begin to fear that the recovery from the 2007 - 2009 recession will not last, and become more pessimistic about the economy. 

d) Businesses become more optimistic about the future of the economy, and as a result, decide to distribute more of their earnings as dividends to their shareholders.

Reference no: EM131301361

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