Question

1. Show the effect on the nominal interest rate and the equilibrium quantity of funds of the following situations in the loanable funds market:
   1. The government requires consumers to pay additional taxes on money they keep in their bank accounts.
   2. During an economic expansion, firms seek to increase the size of their production facility.
   3. The government increases the real estate tax causing less people to want to own a home.
   4. The government over spends its budget and has a deficit.
   5. Foreign countries decrease their tariffs on goods which causes exports to rise.

Answer 1