d. A reduction in the cost of acquiring new physical capital creates many new profitable opportunities for firms.The Loanable Funds MarketInterest rateThis will:Quantity of dollarsInterest rateThis will:IOraise the equilibrium interest rate and decrease the quantity of funds saved and invested.raise the equilibrium interest rate and increase the quantity of funds saved and invested.lower the equilibrium interest rate and decrease the quantity of funds saved and invested.lower the equilibrium interest rate and increase the quantity of funds saved and invested.e. The government decides to increase government purchases (G), which increases the size of the budget deficit.0The Loanable Funds MarketQuantity of dollarsSIOSØOraise the equilibrium interest rate and increase the quantity of funds saved and invested.O raise the equilibrium interest rate and decrease the quantity of funds saved and invested.Olower the equilibrium interest rate and decrease the quantity of funds saved and invested.Olower the equilibrium interest rate and increase the quantity of funds saved and invested. a. Due to warning signs in the economy, such as an inverted yield curve, household confidence about growth in the economydiminishes and workers start fearing that they may lose their jobs in the coming months.0The Loanable Funds MarketInterest rateXThis will:Quantity of dollarsOraise the equilibrium interest rate and decrease the quantity of funds saved and invested.lower the equilibrium interest rate and increase the quantity of funds saved and invested.Ⓒlower the equilibrium interest rate and decrease the quantity funds saved and invested.Oraise the equilibrium interest rate and increase the quantity of funds saved and invested.b. A recession has taken ahold in the economy, with increased unemployment and a reduction in income (GDP) as consequences.0The Loanable Funds MarketInterest rateThis will:Quantity of dollarsISO raise the equilibrium interest rate and decrease the quantity of funds saved and invested.lower the equilibrium interest rate and decrease the quantity of funds saved and invested.O raise the equilibrium interest rate and increase the quantity of funds saved and invested.O lower the equilibrium interest rate and increase the quantity of funds saved and invested.

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