Explain to Congress why their proposal to increase government spending by two trillion dollars to fight COVID-19, financed by borrowing, could have a significant impact on private investment

Using the "Loanable Funds Model," evaluate the effects of government borrowing.The scenario assumes that private savings (and hence consumption)does notdepend on the interest rate.In this scenario, the Savings function in the Loanable Funds Model is vertical.

1.Using the loanable funds model and assuming that saving, and hence private consumption, does not depend on the interest rate,demonstratewith a diagram the impact of an increase in government spending on interest rates and investment. Your response to this requirement must contain the diagram of the Loanable Funds Model.

2.Using the graph you developed in requirement 1 above,explainyour results for investment, the interest rate, national saving, and private saving.