Question: Question 1: Suppose there is a decrease in government budget deficit in Colombia. Analyze the impact of this using the loanable funds market model. Would

Question 1: Suppose there is a decrease in government budget deficit in Colombia. Analyze the impact of this using the loanable funds market model. Would the narrowing budget deficit impact supply of funds or demand for funds curve? How would the equilibrium values of real interest rate and quantity of loans change in response? Question 2: Suppose there is a decline in capital inflows to Italy. Analyze the impact of this using the loanable funds market model. Would the decline impact supply of funds or demand for funds curve? How would the equilibrium values of real interest rate and quantity of loans change in response?

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