\fQuestion 4 10 pts If more firms have to set prices before macroeconomic events unfold, then an increase in a will initially cause O A smaller increase in short-run output and a smaller increase in inflation O None of the options is correct O A larger increase in short-run output and a smaller increase in inflation. O A smaller increase in short-run output and a larger increase in inflation. O A larger increase in short-run output and a larger increase in inflation.Basic information: The economy of Colombia is characterized by the following relations. AnlS Curve Y; = a b(R; 7) A Fisher equation: Ry = 4; + f; Eyma A monetary policy rule: ; = 7 + m('t fr) + Eimea A Phillips curve: m; = E;_1m: + VY, An assumption for inflation expectations: F;_1m = 1 Where f; is a shock to interest rate spreads. f; takes positive values when banks are having financial distress in their balance sheets. Research economists at the central bank of Colombia have determined that 7 =3%,7 =2%,v =1,b = 1, m = 2, where the notation is the same as in class. After being in the long-run equilibrium, in the year 2025, the economy of Colombia did not experience any changes to @, or to the parameters of the model, but the banks of Colombia face financial trouble, so fy305 = 0.01. What is the equilibrium level of inflation in Colombia in 20257