How would the following situations affect the equilibrum nterest rate in the loanable funds market?

(a) The states agree to abolish sals taxes.
(b) The government reduces the budget deficit.
(c) Technological improvements are made to increase expected rates of return.

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  1. Take a shot, what do you think.
    Hint. Draw a supply and demand graph for loanable funds. The price of loanable funds is the interest rate. Now, with each of your situations, decide if the supply curve would shift or the demand curve (or neither).

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