Define any key terms that you feel are important in answering the following question as they are defined in the textbook and explain, in your own words what those definitions mean (5 points), and then thoroughly analyze each of the following changes in the market for loanable funds to answer the these questions Use the diagrams below, resizing them as necessary, to illustrate your analysis in explaining what happens to private savings, private investment spending, and the rate of interest if the following events occur. Assume the economy is closed (no transactions are made with foreign countries).
a. The government reduces the size of its deficit to zero.
b. At any given interest rate, consumers decide to save more. Assume the budget balance is zero.
c. At any given interest rate, businesses become very optimistic about the future profitability of investment spending. Assume the budget balance is zero.