Question: Please help with this macro problem The graph below depicts the market for loanable funds. This graph depicts the market for loanable funds when the

Please help with this macro problem

Please help with this macro problem The graph below depicts the market

The graph below depicts the market for loanable funds. This graph depicts the market for loanable funds when the government running a balanced budget. You will, however, use this diagram to examine the effects of a government budget deficit on the real interest rate and investment spending. 796 Supply Real Interest Rate 696 596 496 3% 296 196 Demand $3 $6 $9 $12 $15 $18 $21 Quantity of Loanable Funds (in billions of dollars) To stimulate economic activity during an ongoing pandemic, the government has passed a new large increase in government spending. This has created a large government budget deficit. The government budget deficit requires the government to borrow $4.5 billion from the market for loanable funds depicted above. Describe the effects of the government budget deficit on 1) the real interest rate, 2) the new equilibrium quantity of loans in the market, and 3) the new amount of private borrowing in the economy. What will happen to private investment? Also, identify the well-known process or effect that this question and your answer describe. Your answer should explain how you identified these effects, and it should reference economic logic...not only the relevant calculations. As a suggestion, whenever you are asked to identify the effect of an event or policy, you should include the before and after situations if possible

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