Glacialand?, the largest country in central? Antarctica, receives word of an imminent penguin attack. The news causes expectations about the future to be shaken. As a? consequence, there is a sharp decline in investment spending plans a. What will be the effects of such an event on the economy of Glacialand assuming no response on the part of the central bank or the? Treasury, so that the money? supply, taxes, and government spending all remain? constant??? A. In the money? market, a decline in income from the reduction in investment would increase the demand for money causing the interest rate to rise. B. The decrease in investment will reduce aggregate expenditure causing equilibrium? output/income to decrease in the goods market. C. The decrease in investment and the change in the money market would both lead to a decrease in? output/income. D. All of the above. Part 2 b. To counter the fall in? investment, the leader of Glacialand calls for a proposal to increase government spending. To finance the? program, the head of the Exchequer has proposed three alternative? options: ?(1) Keep taxes constant and finance the expenditures by printing new money ?(2) Keep tax revenues constant and borrow the money from the public by issuing new government bonds ?(3) Finance the expenditures with an equal increase in taxes Consider the three financing options and rank them from most expansionary to least expansionary. The most expansionary policy is option? __, followed by? __, and option? __ would be the least expansionary. A.3?; 2?; 1 B.1?; 2?; 3 C.3?; 1?; 2 D.2?; 1?; 3