{f} Suppose that in the Great Recession, monetary,r polio},r is constrained and cannot re spond to fiscal policy. In other words, replace the MP curve by Rt 2 0 Is that an argument in favor or against the use of fiscal policyr to stimulate the econ omy'? Problem 2: The Taylor rule John Taylor of Stanford University proposed the following monetary policy rule Rtr'zmrt 7?) +111}: That is, Taylor rule suggests that monetary policy should increase the real interest rate whenever output exceeds potential. Combine this MP rule with the IS curve derived in problem 1 to get a new aggregate demand curve. How does it differ from the aggregate demand curve in l d). How does it differ from the one in the textbook Ch 13' Problem 3: Consider the following equations Y3: 01+I.+G,+ EXtIM: 2::=ac+arl7,; 01:555.] G=Igl?' EX=il IM=U Instead of the textbook investment function, consider the following "accelerator'I investment function where investment rises with short run outptut: I __ %=eib(R:f)+igl'g; b}{};U{iy:1: t (a) Derive the IS curve as a relation between short run outpll'l; and the real interest rate gap R: 17