2 Analysis using IS curve = Consider an economy described by the following data: = $4 trillion I = $1.5 trillion & $3 trillion T = $3 trillion NX = $1 trillion f = 0, mpc = 0.8, d = 0.35 for investment, x = 0.15 for net export 3. Suppose that a financial crisis begins, and f increases to f = 3. (a) What will happen to equilibrium output? (b) If the Federal Reserve can set the interest rate, then at what level should the interest rate be set to keep output from changing? (to keep the same level as the answer of part 2) 4. Suppose the financial crisis causes F to increase as indicated in part 3 and also causes planned au- tonomous investment to decrease to 1 = $1.1 trillion. (a) Will the change in the interest rate implemented by the Federal Reserve in part 3 be effective in stabilizing output? (b) If not, what additional monetary policy changes could be implemented to stabilize output at the original equilibrium output level given in part 2