2. Assume that the economy begins in a long-run equilibrium with no ination shocks (i.e., with T[S = 0). From this position, suppose we then observe that output declines and price ination remains unchanged in the short run, that is, in the period during which the level of ination expectations remains fixed. (15 total points) i. Based on the macroeconomic model developed in class, what exogenous events could have caused these observations? Explain why. (10 points) ii. Given your answer to part i, explain what must have happened to the real interest rate in the short run? (5 points)