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90, help pls. 11) The response of the economy to fiscal policy a. Use an IS-LM diagram, show the effects on output of a decrease

90, help pls.

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11) The response of the economy to fiscal policy a. Use an IS-LM diagram, show the effects on output of a decrease in government spending. Assume central bank is interest rate targeting. Can you tell what happens to investment? Why? Now consider the following IS-LM model: Cza+a(Y-T) I=bo+ bi Y-bai Z=C+I+G i= i b. Solve for equilibrium output when the interest rate is i". Assume a + bi

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