Assume that initially the government has a balanced budget. However, to finance infrastructure investment, the government decides

Question:

Assume that initially the government has a balanced budget. However, to finance infrastructure investment, the government decides to increase spending. Show the effect on the loanable funds market in each of the following cases:
a. The government raises taxes on consumers.
b. The government raises taxes on businesses.
c. The government borrows, leaving taxes unchanged.