5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the aporopriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its orighal state before examining the elfect of cach individuat scenario. (Note: You will not be graded on any changes you make to the graph.) Scenario 1: Suppose savers either buy bonds or make deposits ia savings accounts at banks, Initialy, the interest income cained on bonds or depostt is taxed at a rate of 20%. Now suppose there is a decrease in the tax rate on interest income, from 20% to 15\%. Shit the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving couses the equibrium interest rate in the marke for iosnable funds to and the lever ef invesment spending to Scenario 2: An investment tax eredit effectively lowers the tax bul of any firm that purchases naw capital n the rrievant time period, supoose the government rebeais a previously existing investment tax credit. Shit the apprepriate curve an the graph to reflect this change. The repeal of the previously existing tax credt causes the interest rete to and the leved of investment to Scenario 3: Initially, the government's budget is beianced; then the government sanficantly increares spending on natisul defense wehout changine taxes. This change in spending causes the government to run a budget which national reving Shirt the appropriate curve on the graph to reflect this change. This causes the interest rase to the level of investment spending