Shift in the demand for loanable funds

Assume that this market is initially within equilibrium along with a supply of funds consequent to S₀ and a demand for loanable funds consequent to I₁. When the U.S. Department of the Treasury began selling more bonds to fund a growing federal budget deficit, in this would be probably to cause: (1) a shift in the demand for loanable funds through I₁ to I₀. (2) the rate of return schedule reflected in I0 to shift to the left. (3) a movement down the saving schedule from point b to point d. (4) a movement in this market by point b to point e. (5) households to reverse their saving plans.

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