1.The following was just announced just prior to the exam starting, US Manufacturing Contracts at Fastest Pace Since 2009. In both graphical form and in words, explain what the Loanable Funds model would predict about the direction of interest rates.

2.Demonstrate graphically and in words what the Loanable Funds Model would predict about the change in U.S. interest rates if the following headline appeared in the Wall Street Journal. In an unexpected turn, Europe announces third quarter growth of 4%.

1. The following was just announced just prior to the exam starting, "US Manufacturing Contracts at Fastest Pace Since 2009." In both graphical form and in words, explain what the Loanable Funds model would predict about the direction of interest rates. S2 D2 IR'S si DI 2 Demonstrate graphically and in words what the Loanable Funds Model would predict about the change in U.S. interest rates if the following headline appeared in the Wall Street Journal "In an unexpected turn, Europe announces third quarter growth of 4%." S2 D2 IR'S SI DN 1. The following was just announced just prior to the exam starting, "US Manufacturing Contracts at Fastest Pace Since 2009." In both graphical form and in words, explain what the Loanable Funds model would predict about the direction of interest rates. S2 D2 IR'S si DI 2 Demonstrate graphically and in words what the Loanable Funds Model would predict about the change in U.S. interest rates if the following headline appeared in the Wall Street Journal "In an unexpected turn, Europe announces third quarter growth of 4%." S2 D2 IR'S SI DN