3. In The Austerity Delusion Prof. Blyth notes that Canada "was able to cut and grow in the lgs?" (a) Use the IS curve to briey explain this result from the perspective of an austerity supporter. {b} Use the IS curve to briey summarize Prof. Blyth's explanation of Canada's ex pericnce. [c] What role do unions play in the success of the success of the mechanism you discussed in part 3b 4. Some supplyside economists argue that decreasing taxes will result in higher output at current target ination with no change in the policy rate. (a) What changes in investment and potential output are supposed to follow from a decrease in taxes according to supplyside economics? [b] If the assumptions of supplyside economics hold} is is possible for a lossfunction optirnising central bank to not raise the policy ratc'? Refer to the optimalpolicy rate equation in your answer. (c) Significant- increases inY'D have historically happened only a couple of times in the last century. Briey discuss the practical implications of this for the supplyside view that decreasing taxes will result in higher output at current target ination with no change in the policy rate. 5. Use the IS curve to explain how Ricardian Equivalence works. 6. Fill in the missing mathematical steps in the derivation of the optimal government expenditure rule shown in lecture 23 (in, beginning with the equations on slide T, derive the equations on slide 8}. 7. Is the United States currently in a recession according to the Sahm rule. Support your answer with you own calculated Sahnl Rule graph (like the one shown in class} using U3 data from FRED