Using the loanable funds theory, explain what will happen to the real equilibrium interest rate under the following scenarios:

(1) There is a decrease in the money supply with the Federal Reserve engaging in a contraction policy to try to reduce inflation in the economy.

(2) There is an expansion, and businesses are planning on taking on new capital projects that they will need financing for..

(3) Wealth and liquidity in an economy increase resulting in investors/savers increasing their desire to invest.