please answer the questions

5. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each individual scenario. (Note: You will not be graded on any changes you make to the graph.) O Demand Supply Supply INTEREST RATE (Percent) Demand LOANABLE FUNDS (Billions of dollars)Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 20%. Now suppose there is a decrease in the tax rate on interest income, from 20% to 15%. Shift the appropriate curve on the graph to reect this change. This change in the tax treatment of saving causes the equilibrium interest rate in the market for loanable funds to V and the level of investment spending to V . Scenario 2: An investment tax credit effectively lowers the tax bill of any rm that purchases new capital in the relevant time period. Suppose the government implements a new investment tax credit. Shift the appropriate curve on the graph to reect this change. The implementation of the new tax credit causes the interest rate to V and the level of investment to V . Scenario 3: Initially, the government's budget is balanced; then the government signicantly increases spending on national defense without changing taxes. This change in spending causes the government to run a budget V , which V national saving. Shift the appropriate curve on the graph to reect this change. This causes the interest rate to V , V the level of investment spending