DRAW A GRAPH. For this question, you will need to draw equilibrium in the market for loanable funds. Make sure everything is labeled! (y axis, x axis, your curves and equilibrium).

Use your own numbers, don't make it complicated. Then, using your graph, answer the following questions.

A. If the supply of loanable funds shifts to the right, then the equilibrium interest rate and quantity of loanable funds do what? Draw your shift and label appropriately.

B. What makes up the demand curve? (Circle the correct answer) 1) All the money in circulation 2) Money that was saved 3) Money to be borrowed 4) M1

C. What makes up the supply curve? (Circle the correct answer) 1) All the money in circulation 2) Money that was saved 3) Money to be borrowed 4) M1