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 (G) .What is likely to happen in this market for financial capital?

A) There is no effect on NS or I^D,and the interest rate remains at i*.
B) National saving shifts to NS₁ and the interest rate falls to i₃.
C) Investment demand shifts to I₁^D,and the interest rate rises to i₂.
D) The real interest rate rises because of the decrease in the budget surplus.
E) The real interest rate falls because of the decrease in the budget surplus.