Exercise 2. Analyzing macro events with the IS curve. Suppose the parameters of the IS curve are a = 0, b = -, F = 2% and the real interest rare R is initially = 2%. Explain what happens to short-run output (P) quantitatively and why in each of the following cases (each considered separately): a. R rises from 2% to 4%. b. R falls from 2% to 1%. C. acincreases by 1 percentage point. d. ag decreases by 2 percentage points e. aim decreases by 2 percentage points Exercise 3. Modify the above exercise (exercise 2) to have all the original parameters and cases (a-e) but now assume the b parameter is 1/2 (rather than 34) What happens to short-run output in cases a to e (as in a to e in exercise 2 above)? Compare with the earlier case when b. Why the differences? Review "Key Concepts" and Review Questions on page 310-11 in 5th edition of textbook (pages 202-203 in 4th edition of textbook). Do not turn this 'review' in with your problem set