1. Assume a simple model of the US economy with no international trade. Suppose the government, in an effort to stimulate the economy, increases its spending on goods and services without changing taxes.
   1. Using the model of the market for loanable funds, show how this policy will affect the levels of saving, investment, consumption, and total output in the long run. Explain your answers carefully
   2. Suppose the government did not change its level of spending but decreased taxes instead. Show how this policy would affect the levels of saving, investment, consumption, and total output in the long run. Explain your answers.
   3. Now suppose that the government raises spending and raises taxes by exactly the same dollar amount. Show how this policy would affect the levels of saving, investment, consumption, and total output in the long run. Explain your answers.