21. Suppose the parameters of the IS curve are a = 0.5,a, = 0.2,a, = 0.4,a = 0.2,a = 0.1, b = 0.5, F =3% and the real interest rate is R = 3%. (a) Explain why this economy is not at long-run equilibrium. (b) What should Fed do to bring the economy back to the long-run equilibrium? Assume that Fed intervened and the economy is settled at the potential output but a = 0.5,a = 0.2,a, = 0.4,a = 0.2,a,= = 0.1 still holds. (c) What is new interest rate and short-run output level t this equilibrium? 6