Consider the classical model for goods market we discussed in class. We want to analyze the goods market in the space whose horizontal axis is Y (output) and vertical axis is r (interest rate). (a) How does the aggregate demand for goods (Y D) relate to the interest rate (r)? (i) Explain your answer in detail (in terms of intuition, or using a diagram, or using an example, or using equations etc.), and (ii) display the aggregate demand curve on the Y -r plane. (b) How does the aggregate supply for goods (Y S) relate to the interest rate (r)? (i) Explain your answer in detail (in terms of intuition, or using a diagram, or using an example, or using equations etc.), and (ii) display the aggregate supply curve on the Y -r plane. (c) Draw both the demand and supply curves on the same plane, and nd an equilibrium (Y , r ). If the current interest rate is lower than the equilibrium level (i.e. r` < r where r ` is the current rate), what does happen? (d) Consider a temporary increase in the level of technology. How will the equilibrium consumption and interest rate change in the short run? Explain using a diagram. (e) Consider now a permanent increase in the level of technology. How will the equilibrium consumption and interest rate change in the short run? Explain using a diagram. (f) Consider now an anticipated permanent increase in the level of technology. Is the present consumption aected by technological progress in the future? Explain using a diagram.