The economy moves through business cycles, with periodic expansions, when economic activity is higher than average, and economic slowdowns, which, if severe enough, can lead to a recession. During expansion periods the volume of loanable funds available from the financial system tends to increase and real interest rates tends to rise. With this information, explain the following:
1- why does the demand of loanable funds tend to increase during expansions?
2- why does the supply of loanable funds tend to increase during expansions?
3- does the supply of loanable funds tend to increase by more or less the demand during expansions?