-The Table Above Gives the Demand for Loanable Funds and
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question 102

Essay

$$\begin{array} { c c c } \begin{array} { c } \text { Real interest rate } \\\text { (percent per year) }\end{array} & \begin{array} { c } \text { Demand for loanable funds Supply of loanable funds } \\\text { (billions of 2005 dollars) } \\\text { (billions of 2005 dollars) }\end{array} \\\hline 12 & 8.0 & 13.0 \\10 & 9.5 & 12.0 \\8 & 11.0 & 11.0 \\6 & 12.5 & 10.0 \\4 & 14.0 & 9.0 \\2 & 15.5 & 8.0\end{array}$$
-The table above gives the demand for loanable funds and private supply of loanable funds schedules.
a. What is the equilibrium real interest rate and quantity of loanable funds?
b. Suppose that the government has a budget surplus of $2.5 billion.If there is no Ricardo-Barro effect, what is the equilibrium real interest rate and quantity of loanable funds?

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