Loanable funds market

Using data from the St. Louis Federal Reserve

(FRED) (http://research.stlouisfed.org/fred2/),

analyze savings and investment.

a. Find the most recent value and the value

from the same quarter four years earlier

from FRED for Gross Government Saving

(GGSAVE).

b. Total gross saving in the economy is composed

of gross private saving and gross government

saving. What does gross government

saving represent?

c. Using the values found above, explain whether

the government budget is balanced, in a surplus,

or in a deficit. From the first period to

the most recent period, has government saving

increased, decreased, or remained constant?

d. Draw a graph to show the loanable funds

market in equilibrium. Show the effect on

the loanable funds market from the change

in gross government saving you calculated in

part (a). Explain what will happen to the level

of investment in the economy.

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