Exercise 3. Calculation with the IS curve and the multiplier. Show how to deriye an IS curve that includes the consumption multiplier. That is, assume inyesttnent is described by II = at?! _ bERt _ f)?\" and consumption is described by ct = c+x Pt 11. The other categories of expenditures follow the same rules as in class. a} Show how to get the expression of the IS cunte for this case. b} 1Why do we say that there is a multiplier? What is the magnitude of the multiplier\"? Explain the intuition behind the multiplier. Assume F = 0112, b = 115,1: = (1.4. and that there are no shorttenn demand shocks ti = D. c} How does output respond when the real interest rate increasm by [ID]. d} Draw a graph of the baseline IScurye and the IScurye with the multiplier. You should plot the \"shortterm uctuation\" (Xaxis) Its the real interest rate in the (Yaxis). for each case. 1|Which curse is atter, and why? e} By how much does output increase if there is an aggregate demand shock that increases 5,; by ntu