1. (LO 1) Figure 13.6 shows the savings and investment of loanable funds for the highly classical economy of Gluckland

a) What is the equilibrium rate of interest in Gluckland?

b) According to the graph, what rate of interest would induce the people of Gluckland to save $100 billion?

c) According to the graph, what rate of interest would induce the firms of Gluckland to invest $100 billion?

d) What change in savings would reduce the interest rate to 6 percent from its present equilibrium, and how much would savings and investment be as a result?
Change in savings: $
New level of savings/investment: $

e) Starting at the original equilibrium in Figure 13.6, what change in investment would reduce the interest rate to 6 percent, and how much would savings and investment be as a result?
Change in investment: $
New level of savings/investment: $