1. How to Address Falling Investment in the IS-LM Model. 24 points The current recession has been accompanied by a precipitous drop in investment. We are going to explore how an economic shock like this would affect the short run and long run equilibrium, using the IS-LM model. Assume the economy is well represented by the IS-LM model. Specifically, the investment curve is as follows I(r) = 1000 - }r. (a) Draw the 5 baseline IS-LM graphs, assuming that prices are completely sticky in the short run. Be sure to appropriately label axes, curves, and the equilibrium in (r, Y) space and (P,Y) space. Now assume that the investment function changes to I(r) = 800 - Jr. Draw the direct-effect changes to the IS-LM graphs associated with this shock. Be sure to label the new short-run equilibrium in (r, Y) space and (P,Y) space. (Hint: Please use a different color or at least make it clear which curves correspond to the initial and post-shock setting.) (5 points)