5. AD-AS Model For nearly a decade the Federal Reserve has kept interest rates at historic lows. Recently, the Board of Governors has signaled that the Fed is planning to raise the federal funds rate by adopting a contractionary monetary policy. a. Use both the IS-LM and AS-AD models to graphically illustrate the effect of a contractionary monetary policy on the U.S. economy in the short and long run. Be sure to label the axes, curves, use arrows to show shifts in curves, and mark the equilibrium points: "A" for initial equilibrium; "B" for the short-run equilibrium, "C" for the long-run equilibrium. Assume that prices are completely fixed in the short-run and that the U.S. economy was initially at full equilibrium output before the Fed adopts its contractionary monetary policy.b. Using your diagram drawn in Part (a), indicate what effect would the contractionary monetary policy have on the following economic variables in the United States in the short-run relative to their initial levels. Would the each variable increase, decrease or remain unchanged? No explanations are required. (i) Output (ii) real interest rate (iii) Price Level (iv) Investment (v) Consumption (vi) Unemployment c. Using your diagram drawn in Part (a), indicate what effect would the contractionary monetary policy have on the following economic variables in the United States in the long-run relative to their initial levels. Would the each variable increase, decrease or remain unchanged? No explanations are required. (i) Output (ii) real interest rate (iii) Price Level (iv) Investment (v) Consumption (vi) Unemployment