1. Using a correctly labeled loanable funds graph, show and explain the impact of the new spending on real interest rates in the United States.
2. Explain the impact of the change in interest rates you identified in part (A) on each of the following:

• Capital investment
• Long-term economic growth
• The international value of the U.S. dollar

1. Keynes believed all of the following can be inherently true except

• -wages and prices are sticky
• -the economy is inheratibly stable
• -the economy can experience a long period of recession
• -the government must be involved in the economy
• -the economy is never full employment of resources