Explain how each of the following economic affects the U.S. economy using the graph of IS curve. Particularly, explain whether the change affects ac,aI , ag, aex,aim or R, and how short-run output would change in response to the shock. (a) The stock market crashes. Stock prices decline by 15%. (b) Firms become more optimistic about the future. (c) U.S. consumers suddenly develop a love for German beer. (d) The U.S. government starts a war in a foreign country and raises military spending. (e) The Federal reserve lowers nominal interest rates which translates into a fall in the real interest rate. (f) A trade war reduces the European demand for U.S. products. 21