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4. [9 points in total] Draw the diagram to represent current equilibrium in the loanable funds market. Please make sure to label the axes and
4. [9 points in total] Draw the diagram to represent current equilibrium in the loanable funds market. Please make sure to label the axes and equilibrium interest rate. (2 points) a. Assume that the country's government increases its deficit spending. Explain how the increase in deficit spending will affect the real interest rate. (1 point) b. Indicate and explain how the real interest rate change you identified in part (a) will affect investment in plants and equipment. (1 point) c. Explain how the real interest rate change you identified in part (a) will affect long- term economic growth. (2 points) d. Explain how the real interest rate change you identified in part (a) will affect the country's NCO and NX. (3 points)
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