1. Why the role of loanable markets is crucial in an economy? Explain with examples how different factors influence the demand for loanable funds of a country. Also explain (with graphs) the equilibrium interest rate in a loanable funds market. How does a government deficit budget influence a loanable funds market?

2. Explain with examples the difference between a short-run aggregate supply (SAS) curve and a long-run aggregate supply (LAS) curve (use graphs). Under what circumstances, potential GDP increases and how does it influence LAS and SAS (use graphs)?