AGraphically Illustrate How an Increase in Income Affects the Equilibrium

question 1

Essay

a.Graphically illustrate how an increase in income affects the equilibrium levels of saving,investment,and the interest rate in the loanable funds model.Be sure to label:
i.the axes
ii.the curves
iii.the initial equilibrium values
iv.the direction the curve shifts to
v.the terminal equilibrium values.b.Explain in words what happens to the equilibrium levels of saving,investment,and the interest rates as a result of the increase in income.

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Definitions:

External Oblique

A muscle located on the lateral part of the abdomen, part of the abdominal wall muscles, that aids in rotation and lateral flexion of the torso.

Internal Oblique

A muscle in the abdominal wall that lies below the external oblique and just above the transverse abdominal muscles, functioning to rotate and turn the trunk.

Lateral Leg Muscles

Muscles located on the outside part of the leg, involved in movement and stabilization of the leg.

Dorsiflexion

The action of lifting the foot upwards towards the shin.