7 The table shows an economy’s demand for and supply of loanable funds schedules. The government’s budget is balanced.

a Calculate the equilibrium real interest rate, investment and private saving.
b If planned saving increases by €100 billion at each real interest rate, explain the change in the real interest rate.
c If planned investment increases by €100 billion at each real interest rate, explain the change in saving and the real interest rate.

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Real interest rate Loanable Loanable funds demanded funds supplied (per cent per year) (billions of 2010 euros) 456 850 650 550 5 800 600 750 650 7 700 700 8 650 750 9 600 800 10 550 850