+ Question 43 (10 points) 2: Answer both parts. a) Assuming Canada is a closed economy, explain and illustrate the effects of a reduction in the budget deficit on the market for loanable funds. b) Explain and illustrate with suitable diagrams why and how your answers to part (a) would be different if you assume, that instead of it being a closed economy, Canada is an open economy operating a flexible exchange rate regime. In your answer, assume perfect capital mobility and explain briefly what this means. Paragraph v BIUVA/ Ev Ev