Economists often argue that a temporary Increase in government purchasessay, for military purposesWill crowd out private Investment. Alternatively. suppose that the temporary Increase In government purchases Is for infrastructure (roads, sewers. bridges) rather than for military purposes The government spending on infrastructure makes private investment more productive, increasing the expected future MPK at each level of the capital stock Use the savingeinvestment diagram provided to analyze the effects of government Infrastructure spending on national saVIng, Investment, and the real Interest rate 1.) Using the line drawmg foot, show the effect of this shock on the desired saving schedule. Properly label your line. 2.) Using the line drawmg foot, show the effect of this shock on the Investment demand schedule. Properly label your line. 3 ) Using the point drawmg tool, identify the new equilibrium point Label your point 'B' Carefully follow the Instructions above and only draw the required objects The real interest rate Will E Increase (T) decrease (1,) remain unchanged (7) Reel lntere st retal r 20. 15. 16 14 12 1D Desired national saving & investment ,0 e 'L_\\