(a) Consider two alternative programs for contraction. One is the removal of an investment subsidy; the other is a rise in income tax rate. Use the IS-LM model and the investment schedule, to discuss the impact of these alternative policies on income, interest rates, and investment. 4mks (b) According to the Mundell-Fleming model, when exchange rates are fixed and capital is perfectly mobile, will fiscal or monetary policy be more successful? Explain. 4mks (c) Explain how the ability of inflation expectations to shift the Philips curve helps the economy to adjust, automatically, to aggregate supply and demand shocks. 4mks (d) How does the Keynesian aggregate supply curve differ from the classical one? 3mks