After the spending cut, the loanable funds market graph will depict a decrease in the equilibrium interest rate.
In economics, loanable funds market tells us about behavior of savers and borrowers. The market is a way of representing all of the potential savers and all of the potential borrowers in an economy.
On the graph, a change from i to i1 occurs because a spending cut leads to decreased government borrowing which reduces the demand for loanable funds. As a result, the interest rate decreases as borrowers compete for the reduced pool of available funds.
Note: The graph of the effect of the spending cut on the market is attached below.