(answered) – 1) In this question you analyse the effects of the followingDescriptionSolution downloadThe QuestionHi i need help for the question attached.detailed explanation for part A & B is required :D1) In this question you analyse the effects of the following economic policies in the loanablefund market diagram where we have real interest rate on a vertical axis and the quantityof loanable funds on a horizontal axis.a) (4 marks) Start in the initial equilibrium point A in below Figure where the quantitydemanded of loanable funds (IA) equals the quantity supplied of loanable funds (SA).Demonstrate and explain the effect of an increases of the government revenue in theloanable fund market. Your explanation must also include what happens to the realinterest rate, the level of national savings, and the level of investment as well.Real InterestRateSupplyADemandQuantity ofLoanable FundSA = IAB) (4 marks) You now realise that the increased government revenues (that you analysed inPart a) coming from tax increases affecting the (after-tax) profitability of new investment.Following from your analysis in Part a), use the loanable funds model to demonstrate thispolicy effect and make a comparison to an analysis in Part a). You must also demonstrateyour answers in Figure and explainReal InterestRateSupplyADemandQuantity ofLoanable FundSA = IA
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