Q1 

(a) In 2009 there were huge fires in Australia which destroyed much property and countryside. The government promised to allocate a large amount of money and resources to help with the restoration of the area. Discuss and explain the economic implications of the government’s approach to the situation. 

(b) Explain the factors that change the supply of saving and shift the supply of loanable funds curve? Does a change in the real interest rate shift the supply of loanable funds curve? Explain your answer.