Use the accompanying supply and demand graphs to explain how each of the following affects the supply and/or demand for loans, the interest rate, and the actual amount of loans made.

a. The Federal Reserve sells securities on the open market.

b. The U.S. government borrows to finance its deficit, and the Fed does not monetize the debt.

c. The U.S. government borrows to finance its deficit, and the Fed monetizes the debt.

d. The Federal Reserve lowers the discount rate.

e. Private investment spending decreases because of fears of a recession.

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a. Interest Rate D Quantity of Loans b. Interest Rate C. Interest Rate d. Interest Rate Quantity of Loans Interest Rate X X X X Quantity of Loans Quantity of Loans Quantity of Loans