Consider a closed economy. Assume that all prices in the economy are perfectly flexible and that all markets are in equilibrium. Suppose households' consumption decisions depend on the real interest rate, current disposable income, and the present value of future disposable income. Recall that the so-called loanable funds diagram with savings (S) and investment (I) describes the loan market. Assume that labor and rental capital supply curves are vertical in the current period. Assume that firms maximize profits in a competitive market. Assume that wages and rental rates on capital adjust so that the labor and capital rental markets are always in equilibrium. Draw diagrams of input markets and loanable funds to help you answer the following questions. Predict what would happen in the current period to real wages, real rental rates, quantities of labor and capital, real interest rates, aggregate output, consumption, and investment if: a. There was a temporary increase in productivity (assume for simplicity that the marginal products of labor and capital were unchanged). b. Households become more patient. c. Businesses increase their expectations about the marginal product of capital in the future.