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Running Head: MACRO (ECON1010), 1sem 2017MACRO1 (ECON1010) Assignment 1 (Chapter 28, 26&27)Tutorial Time and Day: _______________________________________________________________________________________________Student Name: ________________________________________________________________________________________________________Student ID: _____________________________________________________________________________________________________________1. Analyze the effects of the following events using the loanable fund market diagram where we have (real) interest rate on the vertical axis and the quantity of loanable fund on the horizontal axis. Please ensure to explain what happens to saving, investment and (real) interest rate.
MACRO (ECON1010), 1sem 2017 a) Consumers decide to save more to prepare themselves for the future (at any given interest rate). Assume the government budget balance is zero. (3 marks)1
MACRO (ECON1010), 1sem 2017 b) A reduction of income tax rate by noting that the source of the supply of loanable fundscoming from both private as well as public saving (3 marks)2