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Interest rate if the government decreases

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Using the market for loanable funds (draw the graphs for yourself) Explain what happens to:

a. The interest rate if the government decreases its spending, Ceteris Paribus. Indicate if you shift either the demand for funds or the supply of funds, or neither, and the direction of the shift (left or right).

b. The interest rate and national saving if households decide to save more, Ceteris Paribus. Indicate if you shift either the demand for funds or the supply of funds, or neither, and the direction of the shift (left or right).

Reference no: EM131861676

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