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The folliwing graph shows the market for loanstele funct. For each of the glven scenaries, adjust the appropriate curve on the graph to help you

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The folliwing graph shows the market for loanstele funct. For each of the glven scenaries, adjust the appropriate curve on the graph to help you complete the questions thst follow. Treat each scenaris separately by resetting the graph to its original state before examiritig the effect of each incmidual scenario. (Mote: You with not be graded on any changes yod make to the graph.) Scenario 1t Suppose sewers ewher buy bonds of make decosits in savings accounts at baviks. Initially, the hitere-ut inceme earnes an bonds ar depotits is taved at a rate of 204. Now suppose there is an increase in the tax race en interest inocele, frem 20% ts 25%. Shit the anprisiate culve on the graph to reflect this change. This change in the tax treatment of interese income frem saving causes the equiltrum ieterest rate in the marked for loanasie funds to and the level of thestmere spending to Scenaris 7: An imvettment tax credit effectively sowers the tax til of amy firm that purchases new casital in the relerant time peniod, 5 uppose the govemment repenis a previsusy enitting investment tax credit. Shit the approphlate curve on. bhe graph to reflect this change. The repeil of the prevously existing tax cresit ceuses the interest rate to and the level of investreet to Soenerio 3i Intialy, the poverment's budget is balanced; then the goverrmest responds to the concluwion of a war by sighificantly fecturing defente soending without ctecigisg tases- This change in soending causes the govertiewent to run a bucget which national saying. Thit the acpropriate curve on the graph fo reflect this cravge. Thit eluies the viterest rate to = : the Wvel of ivestrient tperared

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