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The graph below depicts the loanable funds market in the United States. The interest rate is measured in percent, and quantity is measured in billions
The graph below depicts the loanable funds market in the United States. The interest rate is measured in percent, and quantity is measured in billions of dollars. The supply curve, S1, represents the savings by U.S. households. The demand curve, D1, represents investment spending by U.S. firms on capital projects. Loanable Funds Market Interest Rate 16 15 $2 14 13 12 11 10 A w N D1 Quantity (billions of dollars)The graph below depicts the same loanable funds market from Part 1. The market is in equilibrium, with an interest rate of 8%, and $140 billion exchanged. Suppose that the U5. government needs to borrow $80 billion to nance an infrastructure project. Use the line tool to draw the new demand curve to illustrate the effect of this change. Start the new demand curve at 14% interest and end it at 2%. Loanable Funds Market Interest rate I6 I5 w I! C\" l3 I2 11 ID %5%%%%%%%%%%%%%% Quantity [billions of dollars] Part 3 (2 points) At the new equilibrium interest rate, US. households will save $ billion, and US. rms will invest $ | billion
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