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MindTap - Cengage Learning X lofi hip hop - YouTube 41 X + X A ng.cengage.com/staticb/ui/evo/index.html?eISBN=9781337096546&id=666353321&snapshotld=1509718& . . . CENGAGE | MINDTAP Q Search this course ? Homework (Ch 26) X 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 appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) A-Z O- ? Supply Demand INTEREST RATE (Percent) Supply Demand A+ LOANABLE FUNDS (Billions of dollars) Type here to search O 9 2:45 PM 2/3/2020MindTap - Cengage Learning X Course Hero X + X A ng.cengage.com/staticb/ui/evo/index.html?eISBN=9781337096546&id=666353321&snapshotld=1509718& . . . > > CENGAGE | MINDTAP Q Search this course ? Homework (Ch 26) X Scenario 1: Individual Retirement Accounts (IRAs) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year. A-Z Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to rise _ and the level of investment spending to increase Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government repeals a previously existing investment tax credit. ? Shift the appropriate curve on the graph to reflect this change. D The repeal of the previously existing tax credit causes the interest rate to fall _ and the level of investment to fall . Scenario 3: Initially, the government's budget is balanced; then the government significantly increases spending on national defense without changing taxes. This change in spending causes the government to run a budget surplus , which increases _ national saving. A+ Shift the appropriate curve on the graph to reflect this change. This causes the interest rate to rise crowding out _ the level of investment spending. Grade It Now Save & Continue O Continue without saving Type here to search O e M [X 2:50 PM 2/3/2020