1. (4 Points) How will the following events affect the equilibrium level of interest rates and the amount of borrowing and lending activity in U.S. capital markets? Explain your answers using a graph or by describing the movements of the supply or demand curves. A. As the economy recovers, consumer spending on cars, televisions, and other big- ticket items increases rapidly. B. The Fed decides to sell a significant amount of Treasury Securities from its balance sheet. C. What will happen to interest rates (and borrowing/lending activity) if the events in A. and B. happen at the same time? D. Would the action described in part B be a rational policy response to the event in part A? Why or why not? 1. (4 Points) How will the following events affect the equilibrium level of interest rates and the amount of borrowing and lending activity in U.S. capital markets? Explain your answers using a graph or by describing the movements of the supply or demand curves. A. As the economy recovers, consumer spending on cars, televisions, and other big- ticket items increases rapidly. B. The Fed decides to sell a significant amount of Treasury Securities from its balance sheet. C. What will happen to interest rates (and borrowing/lending activity) if the events in A. and B. happen at the same time? D. Would the action described in part B be a rational policy response to the event in part A? Why or why not