Scenario Supply or Demand for Loanable Funds Sector Canada's government imposes a tax law that makes any savings during the year exempt from personal income taxes. Caroline borrows $23,000 to finance the purchase of a 2019 Subaru Forester. The U.S. government runs a budget surplus and purchases $1 billion worth of bonds from banks with the excess funds. Jake deposits a $1,500 paycheck into a savings account at the local credit union. Suppose California's state government runs a deficit and the California State Treasury issues municipal bonds in order to make up the difference in tax revenue and expenditures. Use the graph to show what happens to the municipal government's demand for loanable funds. Municipal Government Demand for Loanable Funds D m INTEREST RATES QUANTITY OF LOANABLE FUNDS D m Suppose the federal government runs a surplus and the Federal Reserve purchases bonds from banks with the excess funds. Use the graph to show what happens to the federal government's supply of loanable funds. Federal Government Supply of Loanable Funds S g INTEREST RATES QUANTITY OF LOANABLE FUNDS S g