QUESTION 2Assume the graph below indicates the long-run impact on the loanable funds market of a closed economy. Select all scenarios for which the above graph correctly illustrates the long-run effect according to the classical model.Note: This is a multiple-answer question; thus, more than one option may be correct.a.An increase in government expenditure.b.A decrease in transfer payments.c.A decrease in taxes.d.A decrease in government expenditure.

Suppose a small open economy's government eliminates import quotas. Which of the following graphs correctly indicates the long-run economic impact in the loanable funds and foreign exchange markets?Note: This is a multiple-answer question; thus, more than one option may be correct.

Suppose the government of a closed economy reduces social welfare benefits. Which of the following statements or graphs correctly indicate the long-run economic impact according to the classical view with fixed supplies of labour and capital?

Suppose the government of a small open economy reduces social welfare benefits. Which of the following statements or graphs correctly indicate the long-run economic impact of the fiscal policy change on the small open economy according to the classical model?

Suppose the government of Lilliput, a closed economy, increases its spending while investment demand rises simultaneously. Briefly discuss the long-run impact on private saving, public saving, national saving, the domestic real interest rate, and investment according to the classical model of a closed economy (5 marks).Note: Explain your answers for national saving, the domestic real interest rate and investment by mentioning the impacted curve(s) and direction of curve shifts in the market for loanable funds.

Suppose investment demand rises in an autarky. Which of the following statements or graphs correctly indicate the long-run economic impact according to the classical model when consumption depends only on disposable income?