3. Consider the case where the economy is in a liquidity trap. 3.1 Draw an IS-LM graph corresponding to this case. 3 .2 Show what happens if business owners become more pessimistic, such that the autonomous component of investment declines. 3 .3 What happens to tax revenues in 3.2? If the budget were initially in balance, what happens to the budget decit? 3 .4 Suppose policymakers wish to improve the budget balance. Would an increase in lump sum taxes accomplish that aim? What would happen to GDP