IS-LM/AS-AD Analysis

a) Draw the IS-LM diagram and illustrate the effects of a decrease in consumer sentiment (in response to coronavirus) on the interest rate and output. Be sure to label each axis and curve, as well as equilibrium values.

b) Using your answer to part a), demonstrate how a decrease in consumer sentiment will affect consumption, investment, and savings. Show all of your work.

c) What happens with output and prices in response to a decrease in consumer sentiment? Use AS-AD diagram.

d) Suppose that the Federal Reserve wants to counter the effect of the decrease in consumer sentiment on output.Briefly describe one tool that monetary policy-makers could use and illustrate graphically its effect on the IS-LM diagram(starting with your graph from part a) and AS-AD diagram (starting with your graph from part c).