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please answer both of the questions clearly and completely Use your intuitions and economic knowledge to answer the following questions. 1. Suppose that Georgina, Arkana,

please answer both of the questions clearly and completely

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Use your intuitions and economic knowledge to answer the following questions. 1. Suppose that Georgina, Arkana, and Arkina have each saved 1 million rupiahs. Each of them could invest up to 2 million rupiahs on their specific investment projects. The rates of return respectively are 6% (on Arkana's project), 10% (on Arina's project), and 15% (on Georgina's project). a. If they cannot borrow nor lend funds, how much saving will each person have after one year when they get the returns from their investment projects? b. If they can borrow and lend among themselves at an interest rater, thus small market for loanable funds is now available, how much would be the supply of and the demand for loanable funds at an interest rate of 8 percent? At 12 percent? Explain what is happening in the market in each situation. c. Determine the equilibrium interest rate in the loanable funds market. At this interest rate, which person(s) would borrow and which person(s) would lend? [remember the requirement needed to satisfy an equilibrium condition] d. At the equilibrium interest rate, how much saving does each person have a year later after the investment projects pay their return and loans have been repaid? Compare your answers to those you gave in part (a). Who get benefits from the loanable funds market, the borrower(s) or the lender (s)? Is there anyone who get worse off? 2. Using the Loanable Funds Market theory, explain graphically the impact of a budget deficit on the loanable funds market, public savings, interest rates, investment and on economic output. Submit your answers, at latest, five (5) minutes before the online lecture begins

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