1. Do Now: Investment curve handout

2. Draw a fully labeled graph of a loanable funds market including the savings and investment curves

3. Describe the relationships between real interest rates and the quantity invested and the quantity saved For each, why is this the case?

4. What is the difference between a movement along the savings or investment curve and a shift in the curve?

5. Which factors influence savings rates (other than real interest rates)?

6. Which factors influence the level of economic investment (other than real interest rates)?

7. Scenario #1 Decrease in Public Savings: Government spending on goods and services (G) increases, leading to an increased budget deficit. Draw (on the graph) and explain (in writing) the effects on the loanable fund market, including the change in the equilibrium (if any).

8. Scenarios: Government spending on goods and services (G) increases, leading to an increased budget deficit. Draw (on the graph) and explain (in writing) the effects on the loanable fund market, including the change in the equilibrium (if any).

9. Based on this, what is the net effect on real GDP of an increase in Government Spending (refer to the expenditure approach equation for GDP in your answer)”

10. Scenario #2: New technology makes capital investment more profitable During the 1990s, breakthroughs in IT technology made computer based capital investments much more profitable for many firms. Graph and explain the effect that this had on the savings and investment curves, including the change in the equilibriums

11. Scenario #3: The Wealth Effect During the mid-2000s, the rapid increase in housing values during the real estate bubble made many feel much more wealthy. Graph and explain the effect that this would have on the loanable funds market

12. Come up with one other scenario that would result in either a shift in the investment or savings curve, and graph and explain it.