At the beginning of 2008-2009 recession, the financial crises broke out and there has been a temporary tightening of credit conditions that makes borrowing by firms much more difficult. In our real intertemporal model with investment we capture such a temporary tightening by a drop in the total factor productivity variable Z (holding Z' constant). You can think about firms having difficulties buying intermediate materials if they cannot get short term loans (from banks or suppliers) which disrupts/slows down the production process. So they produce less Y for given inputs N and K. a) Analyze graphically what happens on the labor market and the goods market in the current period as a result of a decrease in Z (assume Z' is unchanged). Specifically, focus on the effects on the real wage, employment, the real interest rate, and aggregate output. Assume that any effects of a change in the real interest rate on labor supply is extremely small. Clearly identify all curves on your graphs and provide an explanation for each curve shift. (8 points) b) How is consumption (C) and investment (I), are affected by the fall in Z? Justify. (2+2 = 4 points) c) How is the utility/happiness of the consumer affected by the fall in Z? Justify. (2 points)