2. In each of the following scenarios, predict what will happen to (1) employment, (2) real wages, (3) output, (4) the interest rate, and (5) the price level using the classical model showing the graphs for each scenario and the shifts that led you to the effects.

a.There is a sudden decrease in consumption due to a decrease in consumer confidence.

b.There is an increase in productivity due to an oil shock

(in the sense that each worker can now produce more, given the same capital stock).

c.There is a decrease in the money supply (M)