The centrepiece of the 2014 G20 meeting is for all 20 countries to boost investment, create new jobs, and together boost world income by $2 trillion over 5 years.
a. Explain the effect of an increase in planned investment on the demand for or supply of loanable funds.
b. If G20 countries do increase global income, how will the world real interest rate, saving, and investment change? Explain your answer.
c. On a graph of the global loanable funds market, illustrate your answer to part (b).