This question only considers the partial equilibrium effects.

Suppose that the government in aclosed economydecreases its expenditures in the first period (other conditions are the same as those in our class lectures). In this case, the economy will investand save. Suppose that the government in asmall open economydecreases its expenditures in the second period (other conditions are the same as those in our class lectures). In this case, the economy will investand save.

Note: For each of the above blanks, fill in one of the following three choices:A. more;B. less;C. at the same amount as before.

Hint:You can read the slides for the loanable funds market to answer this question.