Using the small open economy loanable funds market model, illustrate the impact of each of the following events graphically and describe what happens to investment, saving and net exports as a result of the change. Assume that the economy initially has a trade deficit.

a. The home government tries to reduce government budget deficit.

b. There is a global saving glut in the rest of the world.

c. The home government increases taxes on business owners. [Hint: note that this is not the income tax that influences the disposable income].