Since the beginning of COVID-19, the U.S. economy has been hobbled by too much supply: too much fiber optic bandwidth, too much vacant office space, too many empty airplane seats. The scale of the current capacity glut means companies likely will be slow to invest in new buildings and equipment, other than to replace what's wearing out.

a) (6 pts.) According to the preceding paragraph, has the "capacity glut" increased or decreased the demand for investment goods? Why?

b) (10 pts.) Using graphs, show how the changes you described in part (a) affect equilibrium saving/investment and the equilibrium real interest rate.