Questions-1.Explain in brief the following Loanable Funds Theory with graphical presentation.

a.Business demand for loanable funds

b.Government demand for loanable funds

Questions-2.If financial market participates over estimated inflation in a particular period, will real interest rates be relatively high or low. Explain with graphical presentation.

Questions-3.Suppose that Treasury bills are currently paying 9% and expected inflation is 3 %.What would you expect the real rate of interest to be?

Questions-4.Does a large fiscal budget deficit result in higher interest rate? Offer your opinion on this issue.