B (i) Following exit from the EU single market, assuming the UK decides to trade only among the four nations (i.e., without rest of the world). How will the shocks listed in 'a-e' below affect the UK's (i.1) equilibrium level of output, (i.2) unemployment, (i.3) the IS curve and (i.4) the exchange rate (XR) curve (you need to draw the two curves)

(a) stock market crash (4 marks) (b) a rise in the retirement age (4 marks) (c) an increase in depreciation rate (4 marks) (d) a sudden rise in savings that raised the stock of capital (4 marks) (e) a decline in the rate of technological progress (4 marks)

(ii) If we relax earlier assumption, and now assume that the UK is a small open economy, demonstrate using the 3-equation model the adjustment to equilibrium of an inflation shock (10 marks) (you need to draw the 3- equation model)