The Diagram Below Show the Market for Financial Capital Assuming

The diagram below show the market for financial capital assuming that national income is constant at potential GDP,Y*. FIGURE 25-2 Refer to Figure 25-2.Suppose national saving is reflected by NS₀ and investment demand is reflected by I₀^D.Now suppose there is a reduction in government purchases.What is the effect on investment demand?

A) National saving shifts to NS₁,causing an increase in the quantity of investment demanded from I* to I₂.
B) There is no effect on NS or I^D,and the quantity of investment demanded remains at I*.
C) Investment demand shifts to I₁^D,causing an increase in the quantity of investment demanded from I* to I₁.
D) Investment demand shifts to I₁^D, causing an increase in the quantity of investment demanded from I* to I₃.
E) National saving shifts to NS₁,and investment demand shifts to I₁^D,causing an increase in the quantity of investment demanded from I* to I₃.