Consider the loanable fund (LF) market where Q is the quantity of LF and r is the real interest rate: Demand: QLF = 2,000 4001' Supply: Q\"; = 1007' + 500 Note that if the real interest rate is 5%, then the r in the equation would be 5. All quantities of LF are in million. Part A: \"Assume a closed economy and a balanced budget\" 1. Find the equilibrium real interest rate and the equilibrium quantity of LF. (2 points) 2. Calculate the private saving for this economy. (1 point) Part B: \"Assume an open economy\" Holding everything else constant, suppose the government runs a budget decit of $200. To circumvent this situation, the government decided to open the economy to foreign sector that results in trade surplus of $300. 3. Find the new equilibrium real interest rate and the new equilibrium quantity of LF given this information and holding everything else constant. (2 points) Hint: Use the supply side analysis 4. Graph your ndings by using the \"three diagram model\". Show all critical points before and after the change. What will happen to private investment, 3*, NCO, and real exchange rate, E. (4 points) Part C: Suppose the government decided instead to rebalanoe the government budget when this economy is open to foreign sector. 5. Find the new equilibrium level of real interest rate and private investment? (2 points) 6. Compared to question (3), are there any crowding effect in this economy? Explain graphically. (2 points)