The market for loanable funds can be described by the following equations: Demand for loanable funds: DF = 600 15i Supply of loanable funds: 5.: = 360 + 35i where i = interest rate (interest rate is expressed in percentage form, i.e., if i = 5, then i is 5%) The initial equilibrium interest rate and quantity of funds are 4.8% and 528 respectively. Part (a) Due to the recent loosening of COIVD restrictions, the consumer condence index changes from 118 to 123. As a result, for any given level of interest rate, the supply of funds changes by 60. Find the changes in equilibrium levels of interest rate & investment. Note: You need to decide whether the supply of funds increases or decreases. Part (b) (continued from part a) Suppose the government wants to increase the equilibrium level of investment in part (a) by 15 via a change in income taxes. What happens to income taxes? Find the level of interest rate that would achieve the goal. Answers: 0 For numerical answers, just enter the numbers (i.e., no unit of measurement, no comma). o For example, if prot= $5,125.6 and you are asked to keep your answer to 1 decimal place, just enter "5125.6" in the answer box 0 Nism between the negative sign and the number. 0 DO NOT enter " $51256" or " 5,125.6" or "prot = 5,125.6", etc; otherwise, the system will mark you wrong & you won't receive marks. Part (a) Change in equilibrium level of interest rate = % (Keep your answer to 1 decimal place if needed) Change in equilibrium level of investment = (Keep your answer to 1 decimal place if needed) Part (b) To achieve this goal, the government should decrease income taxes. This statement is accurate. Answer = (yes or no). Interest rate that achieves the goal = % (Keep your answer to 1 decimal place if needed)