(c) Finally, consider a central bank with a dual mandate i.e. MP: Rt 'F = m[m_1 fr) + :rll. Assume that :E = 0.2. Modify the spreadsheet to reect this assumption. What is the effect of this change on prediction of demand shock (a = 1)? Explain and include a picture of the dynamics. (Note: I do not want the whole spreadsheet, just the picture of the path of output, ination, and the interest rate.) Answer: See spreadsheet on Moodle for answer. A B D E F G H K L M N O P Q time Inflation Output GaInterest Rates 2 Shocks bar a 2.5 bar o O 2 Parameters bar b 0.5 bar m 1.5 1.5 -Inflation barr 2 bar pi 2 Output Gap bar v 0.5 Interest Rates o o o o o o o o o o o o o 0 0 0 0 0 0 0 N N N N N N N N N N N N N N NN NN NN N N N N N N N N N N N N N N N N N NN 0.5 1 4 7 10 13 16 19 22 25 28 31 34 37 40 16 17 18 19