Use the savings and investment two-country model to analyze each of the following scenarios. You should illustrate savings and investment for Home, Foreign, and the world. Assume the countries begin with a current account balance. State how each of the following variables change: the world interest rate and investment and savings in Home, Foreign, and the world. State whether the Home and Foreign countries have a current account deficit or surplus.

a. The home government increases its budget deficit.

b. A climate change leads to a decrease in productivity in Foreign, reducing investment demand.

c. Both Home and Foreign simultaneously reduce taxes on private saving.