Consider the situation below how it might affect the US market interest rate. Draw a demand and supply for money as part of your answer. Explain briefly about your graphs and reasoning.

1. Covid 19 Pandemic has a nevative effect on the US economy. How might this affect the demand or supply of money (or both)?

2. Government expenditures are supported by tax income or borrowing. The new US government plans to propose a large stimulus package to the congress soon. If the proposal passes, the government plans to borrow money instead of raising taxes. How might this decision affect the US market interest rate.

3. I showed you in class that the European countries interest rates are almost zero and some are negative. The US interest rates seem to be much higher than the EU interest rates. How might this affect the US market interest rate.

4. Last year, 2020, the S&P 500 went up by 16%. This year, investors expected that the market will perform much better than last year. They decided to borrow money to buy more stocks. How might this affect the US market interest rate.