Part 1 - Check Your Understanding- Answer the following questions. 1. Explain the difference between the money market and the loanable funds market. 2. Explain why borrowers and savers pay more attention to the real interest rate rather than the nominal interest rate. 3. Explain why the demand for loanable funds is downward sloping. 4. Explain why the supply for loanable funds is upward sloping. Part 2 - Calculate- The chart to the right gives information about the country of Knutland. Answer Gross Domestic Product $24 trillion the following questions assuming that Knutland has a Tax Revenue $1 trillion closed economy. 5. Calculate private savings. Show your work. Consumption $16 trillion Government spending $4 trillion 6. Calculate public savings. Show your work. 7. Calculate national savings. Show your work. 8. Calculate investment spending. Show your work. 9. Assume that Knutland opens their economy and the capital inflows are $6 trillion and the capital outflows are $1 trillion. Calculate the total savings available to borrowers. Show your work. 10. Did the real interest rate in Knutland most likely increase, decrease, or stay the same when Knutland opened its economy? Explain