please answer the questions
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 Supply Demand Supply INTEREST RATE (Percent) Demand LOANABLE FUNDS (Billions of dollars)Scenario 1: Individual Retirement Accounts (IRAs) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year. 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 rel e period. Suppose the government repeals a previously existing investment tax credit. Scenario 1: Individual Retirement Accounts (IRAs) allow people to shelter some of their income from taxation. Suppose the maximum annual contribution to such accounts is $5,000 per person. Now suppose there is an increase in the maximum contribution, from $5,000 to $8,000 per year. 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 . decrease Scenario 2: nt tax credit effectively lowers the tax bill of any rm that purchases new capital in the relevant time period. Suppose the increase eviously existing investment tax credit. government Shift the appropriate curve on the graph to reflect this change. The repeal of the previously existing tax credit causes the interest rate to and the level of saving to fall Scenario 3: Initially, the government's budget is balanced; then the gover esponds to the conclusion of a war by significantly reducing defense spending without changing taxes. riseShift the appropriate curve on the graph to reflect this change. The repeal of the previously existing tax credit causes the interest rate to and the level of saving to Scenario 3: Initially, the government's budget is balanced; then the government responds to the conclusio fall var by significantly reducing defense spending without changing taxes. riseThis change in spending causes the government to run a budget , Which national saving. deficit Shift the appropriate curve on the graph to reflect this change. surplus This causes the interest rate to the lever or mvestment spending.This change in spending causes the government to run a budget 1" , which 1" national saving. increases Shift the appropriate curve on the graph to reect this change. decreases This causes the interest rate to T , v the level of investment spe - fall Shift the appropriate curve on t rise h to reflect this change. This causes the interest rate to the level of investment spending.Shift the appropriate curve on the gra crowding out change. increasing This causes the interest rate to 1" , T the level of investment spending
