1) One strategy you could follow is to set the real interest rate r equal to a fixed value F for the entire month. If you set the real interest rate, there isn't an LM curve; the central bank staff just adjusts the money supply every day to keep r = F ; you can describe this on a graph by drawing a horizontal line at F . When the conmiittee meets to choose F , you don't know exactly where the IS curve will be over the course of the month. You just have an estimate or forecast of where the IS curve will be. Your forecast [8 curve is called IS E . The actual [8 curve is called IS A . You choose the value for f so that 1' will turn out to equal 17 if your forecast for the IS curve turns out to be correct, that is if IS \"' turns out to be the same as ISE . But ISA might turn out tobe to theright of I55, or to the left of ISE. a) Draw a graph that shows ISE , potential output ? (marked on the horizontal axis), and the value you will set for f . b) Draw a graph that shows what happens if the actual IS curve turns out to be to the left of IS E . On the graph, show IS E , IS A , f , l7 and actual output I" . Is this a "recession" or a "boom"