In the classical model of the LR closed economy, a reduction in taxes T will I. decrease private savings. I. decrease equilibrium investment spending. Select one: O A. Only I is true. O B. Only II is...

Extracted text: In the classical model of the LR closed economy, a reduction in taxes T will I. decrease private savings. I. decrease equilibrium investment spending. Select one: O A. Only I is true. O B. Only II is true. O C. Both of the above are true. O D. None of the above is true. In the classical model of the LR closed economy, with MPC=0.6 and interest sensitivity parameter b=1000, an increase in taxes by 50 (AT=50) will I. reduce private savings by 20. II. reduce equilibrium investment spending by 20. Select one: O A. Only I is true. O B. Only II is true. O C. Both of the above are true. O D. None of the above is true.