i. Suppose a government moves to reduce a budget deficit. Using the long-run model of the economy developed in Chapter 3, graphically illustrate the impact of reducing a government's budget deficit by in- creasing (lump-sum) taxes on household income. Be sure to label the axes, the curves, the initial equilibrium values, the direction curves shift, and the terminal equilibrium values. (3 points) ii. State in words what happens to the real interest rate; national saving; investment; consumption; and output. (3)