Draw graph and will the interest rate be the same Canadian economy has struggled with Covid pandemic crisis. However, numerous economic forecasts that the economy will soon enter an expansion. What is the likely effect of the expansion on the expected profitability of new investment in plant and equipment? Using loanable funds model, illustrate (graph) and explain the effect of the forecast of an economic expansion, assuming that both borrowers and lenders believe the forecast is accurate. What happens to the equilibrium (real) interest rate and the quantity of loanable funds? What happens to the quantity of saving and investment?

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