1. Good market, money market, and IS/MP (22 points) Assume the economy behaves according to the assumptions in the Keynesian cross and IS/MP model. Also, assume that the marginal propensity to consume is 0.75 1.1. Using the space below, illustrate the goods market (Keynesian cross) diagram below (top panel) and the IS/MP diagram (bottom panel). Be sure to carefully label the axes (in words and symbols), curves, and initial equilibrium Point A on both diagrams. Label initial equilibrium values Y* and n* where applicable. [4] 1.2. Now, suppose that the government increases taxes by $200 in this economy. How much will the expenditure line shift? Does it shift up or down? Compute the size of the shift and illustrate this shift on the top panel above. Label this equilibrium on the top and bottom panels as Point B' and clearly label the new curve on the top panel using the notation from class. [3]