2. Start with the IS-MP-PC we introduced in class and the same parameter values we used in our example: =2 y =100 r =2 =1 =1 =1.5 a. Re-derive the expressions for inflation and output as a function of parameters using the initial three equations from the model. Show that when there are no shocks and inflation expectations are equal to the central bank's target, actual inflation will be equal to the central bank's target and output will be equal to potential. b. Repeat the exercise from class (a one time shock in period 2 of , but calculate inflation and output for periods 1-5 instead of just two periods (assume that after period 2 the shock disappears so c. Repeat the same shock but this time change to 3. What do you notice about the path of output and inflation in this case compared to part b? d. Repeat b and c but this time assume a one time aggregate demand shock occurs in period 2