Shift the supply or demand for loanable funds functions to reflect the impact of the shock. Indicate whether the real interest rate and the quantity of loanable funds Rises or Falls.
a. Households become concerned about social security and decide to save more of their income.
rate _________________ Loanable Funds ________________
b. The capital stock becomes more productive due to a technological innovation.
rate _________________ Loanable Funds ________________
c. The federal government is trying to decide what to do with the surplus they expect to have this year. They increase spending on schools. (This question is tricky; decide which information is important and which is not.) rate _________________ Loanable Funds ___________