3. The US is functioning at Yn during periods t and t-1; individuals form their expectations such that = t-1; Values of variables: t-1= 1.5% and = 3.5%. a. Is the US functioning at its full MR eqm? Why or why not? List 3 characteristics of the full MR eqm. What is t? What is e t? What is the initial ? b. Let's assume that concerns about the size of the US national debt have led Congress to reduce its spending. (Note that this is what is occurring in the UK now.) What is this "shock"? Use the IS-LM-"PC" graph to examine the SR and MR effects of this shock, cet. par. Provide: the "PC" equation and the name of the output gap created. Provide values for , , and i during two periods of the MR (t+1 and t+2) if the absolute value of the change in is 0.5%; setting up a table may be helpful. Use directional arrows to describe what the Fed is doing during periods t+1 and t+2 and when it ultimately acts in period t+3 to "stabilize ." Use directional arrows to show changes in all IS components from original to new full MR eqm