1. a. What are IS and LM shocks?

b. Use the IS-LM model to analyze the effects of:

i. A boom in the stock market that makes consumers wealthier.

ii. After a wave of credit card fraud. (Hint: consumers using cash more frequently in transactions).

2. For each shock,

a. Use the IS-LM diagram to show the effects of the shock on Y and r. b. Determine what happens to C, I, and the unemployment rate.