Consider the market for loanable funds. Remember the sources behind the demand and the supply curve; that is, the parties who want to borrow and the parties who want to lend funds, respectively. Explain in words and show in a D&S graph what happens to the demand and supply curves and hence the interest rate if the following events occur, separately:

• Government runs a larger budget deficit (hence needs to borrow more funds)
• Business are discouraged by an election outcome (in a fictional economy!) and decide to postpone investments in physical capital
• The rest of the world cannot lend us as much due to dealing with their own crisis
• Increase in household savings