Explain the effect of the following events on interest rate

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Explain the effect of the following events on the interest rate in the loanable funds market. Demonstrate you answer graphically.

a)tax revenue is lower than expected and people expect cities to default on municipal bonds. They sell thier bonds and hold cash instead.

b)a significant number of people begin to use online banking services, allowing them to lower the average balance on their checking account.

c)economists begin to expect economic growth to pick up. In response, firms increase the amount they spend on capital goods.

Reference no: EM13154803

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