The country of Hayekiaspends $3,000 billion on consumption goods and $1,000 billion on investment goods. At the present time, $500 billion is needed annually to meet depreciation of capital. However, a new president, who is very charismatic and says that the economy is too sluggish, is elected on a platform of quickly boosting the economy, and he calls for the government to discourage savings by placing a 95 percent tax on interest earned from savings and return on investment. He also calls for the country to change its name to Keynesia. Soon after his election, savings drop to $300 billion and consumer spending goes up by $700 billion. Answer the following questions about the results of the new economic experiment in Keynesia:

A. What will be the case for the sale of consumer goods in the next six months? Will the new president's experiment look to be successful or not? Why?

B. What is likely to happen in the economy in five years, should the savings tax remain and savings fall? Why?