Draw a correctly labeled loanable funds graph that shows wha

Draw a correctly labeled loanable funds graph that shows what happens to real interest rates for each of the following situations: (You will have 3 graphs)

The government begins increases spending on education.

Private investors become less optimistic about the economy.

More Americans retire and begin drawing funds from their savings accounts.

Solution

a. The supply of loanable fund will shift left,because people don\'t need to save money for education.
b.The demand of loanable fund will shift left, because investors have increasing risk.
c. The supply of loanable fund will shift to nowhere, but it will be a movement along the curve.