During the 2007-2009 Great Recession, households experienced a decline in wealth due to the housing market collapse, and tightening lending standards made it more difficult for businesses to get loans (at any interest rate). 1 (a) Illustrate these two effects in the IS/LM graph (assuming prices are fixed). Briefly explain the logic behind any shifts in curves. What is the effect on (i) real GDP, (ii) real consumption, and (iii) real interest rates?