NOTE : THE ANSWER SHOULD BE TYPED.

Draw a graph to illustrate the effect of an increase in the demand for loanable funds and a smaller increase in the supply of loanable funds on the real interest rate and the equilibrium quantity of loanable funds. Draw a demand for loanable funds curve. Label it DLF. Draw a supply of loanable funds curve. Label it SLF, Draw a point at the equilibrium real interest rate and quantity of loanable funds. Label it 1. Draw a curve that shows an increase in the demand for loanable funds. Label it DLF, Draw a curve that shows a smaller increase in the supply of loanable funds. Label it SLF, Draw a point at the new equilibrium real interest rate and quantity of loanable funds. Label it 2.Real interest rate (percent per year) + 12.0- 10.0- 8.0- 6.0- 4.0 2.0- 0.0- 0.0 1.0 2.0 3.0 4.0 5.0 Loanable funds (trillions of 2012 dollars)