A)Suppose the government decreases taxes and run a budget deficit while the central bank (RBA) pursues an expansionary monetary policy. What effect should this policy mix have on income and interest rate in the short run? illustrate your answer with a graph.(3 marks).

Be sure to label: i. the axes; ii. the curves; iii. the initial equilibrium levels; iv. the direction the curves shift; and v. the new short-run equilibrium

B)Suppose that the government wants to raise output but keep interest rate constant. What mix of monetary and fiscal policy will achieve this goal? Explain your answerwithouta graph.(2 marks)