1. The market for loanable funds is in equilibrium. All else equal, the federal deficit is growing. Describe how this will affect the market for loanable funds, the equilibrium interest rate, and the equilibrium quantity of loanable funds.

2. How can autonomous consumption be greater than zero when disposable income equals zero?

3. Suppose the economy is in income-expenditure equilibrium. How will each of the following situations affect planned investment and unplanned inventory investment? a. The Federal Reserve decreases interest rates. b. Major economic indicators decrease business optimism about growth in real GDP.

spanning, 83m (billions of dollars) 54.000 3.500 AEPlannod 3.000 CF 2.000 800 f 300 0 8500 1.000 1.500 2.000 2.500 3.000 3.500 4,000 Real GDP (billions of dollars) Reference: Ref 1119 (Figure: The Aggregate Consumption Function and Planned Aggregate Spending) Look at the table The Aggregate Consumption Function and Planned Aggregate Spending. If current disposable income increases in this economy, then the: O A) aggregate expenditures curve will shift down. 6) 3) economy will move upward along the aggregate expenditures curve. O C) aggregate expenditures curve will shift up. 0 D) economy will move downward along the aggregate expenditures curve. Planned aggregate spending. ABM (billions of dollars) 54.000 3.500 AEHanned 3.000 CF 2,000 800 l 300 0 8500 1.000 1.500 2.000 2.500 3.000 3.500 4,000 Real GDP (billions of dollars) Reference: Ref 1119 (Figure: The Aggregate Consumption Function and Planned Aggregate Spending) Look at the table The Aggregate Consumption Function and Planned Aggregate Spending. If expected disposable income decreases in this economy, then the: O A) economy will move downward along the aggregate expenditures curve. 0 B) aggregate expenditures curve will shift down. 0 0 economy will move upward along the aggregate expenditures curve. 0 D) aggregate expenditures curve will shift up