i. Precis of a government ouoget dances Suppose a hypothetical open economy uses the U.S. dollar as currency. The table below presents data describing the relationship between different real interest rates and this economy's levels of national saving, domestic Investment, and net capital outflow. Assume that the economy is currently operating under a balanced government budget. Real Interest Rate National Saving Domestic Investment Net Capital Outflow (Percent) (Bullione of dollars) (Billions of dollars) (Cilione of dollars) 25 -10 35 35 40 25 45 10 30 Given the information in the table above, use the blue points (circle symbol) to plot the demand for lommable funds. Next. use the orange points (square symbol) to plot the supply of loenable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market. Market for Leanable Funds Demand Supply REAL INTEREST RATE Equilibrium QUANTITY OF LOANABLE FUNDSOn the following graph, plot the relationship between the real interest rate and not capital outflow by using the green points (triangle symbol) to plat She points from his initial date table. Then was the black point ( aprobe to indicate the level of net capital outflow at the equilibrium real interwat rate you derived in the previous graph. Not Capital Outlaw Ex. NOO REAL INTEREST RATE 30 NET CAPITAL OUTFLOW (Billions of dollars] Because of the relationship between not capital outflow and not exports. the level of net capital outflow at the equilibrium real interest rate implies that the acemomy is experiencing Now. suppose the goven ing a budget deficit. This means that . which leads to lanable Funds. after the budget deficit occurs, -librium wat rate in 6%. The following graph shows the demand curve in the foreign- currency exchange market.Use the green line (triangle symbol) to show the supply curve in this market before the budget deficit. Then was the purple line (diamond symbol) to show the supply curve after the budget deficit. Market for Foreign Currency Exchange A Initial Supply Supply with Dofloit REAL EXCHANGE RATE Demand 10 10 20 QUANTITY OF DOLLARS (Billions) Summarize the effects of a budget deficit by filling in the following table. Real Interest Rate Real Exchange Rate Trade Balance Effects of a Budget Deficit