2. (15 marks) Consider a closed economy, Lone. To tackle the severe recession, her government conducts a tax rebate to the households. a. Assume that the central bank is independent on the government decision. i. Use the IS-LM model to explain how this government act affects the interest rate, investment and income of Lone. ii. Evaluate the effectiveness of the above policy in tacking the recession if investment demand in Lone is interest elastic. Explain in words. (8 marks)