28 After you have studied Economics in the News on pp. 550–551, answer the following questions.

a Looking at Figure 1 on p. 551, what must have happened to either the demand for or the supply of loanable funds?

b How has the Bank of England policy of buying UK government bonds affected the supply of loanable funds?

c How does a government budget deficit influence the loanable funds market and why does a decrease in the deficit lower the real interest rate?

d When an economic expansion gets going, what happens to the demand for loanable funds and the real interest rate?

e If an expanding economy increases government tax revenue, how will that affect the loanable funds market and the real interest rate?