1. [10 points] Households often finance their purchases of durable goods (cars, major appliances, etc.) by borrowing the initial cost and paying them off over time. Therefore, durable goods consumption may be sensitive to movements in the real interest rate. Suppose that instead of C, = a Y, , the consumption equation is C, = a Y, - be (r, - F ) Y, . a. Assume all the other components of GDP are as in the original IS curve. Derive the equation for the IS curve with this new assumption about consumer durables. b. How do the 2 versions differ (which is steeper, flatter, etc.)