The government is running a budget balance of zero when it decides to increase education spending by $200 billion and finance the spending by selling bonds. The accompanying diagram shows the market for loanable funds before the government sells the bonds. Assume that there are no capital inflows or outflows. How will the equilibrium interest rate and the equilibrium quantity of loanable funds change? Is there any crowding out in the market?

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Interest rate 24% 22 20 18 16 14 12 10 6. 4 2 $200 400 600 800 1,000 1,200 Quantity of loanable funds (billions of dollars)