Let's assume the economy was operating at full employment before the pandemic hit. When the pandemic started, many sectors of the economy were shut down, causing a decrease in labor demand and resulting in unemployment. Additionally, consumer income decreased, causing people to save more and reducing their demand for goods and services. This question will guide you through a step-by-step model to demonstrate the effects of the pandemic's onset.

As for the following questions, let's assume that the economy is at full employment, and we want to showcase general equilibrium. This means that the intersection of the IS and LM curves will be at the full employment level of output and on the FE line. 1). Use the model to demonstrate the effects of a decrease in consumer spending and the associated IS curve on the equilibrium in the goods market? Please provide a diagram of the Saving Investment equilibrium in the goods market and illustrate the impact of an increase in saving on the IS curve. Please only show the shift in the IS curve and do not concern yourself with the general equilibrium or the other markets. 2). To continue analyzing the market equilibrium graph for savings and investment, repeat step 1, but this time, consider the effects of a decrease in business sentiment that would lead to a decline in business investment. Show the impact of this change on the market equilibrium and the IS curve, similar to the previous analysis. 3.)Please display the changes in the IS and AD curves and the resulting new level of output in the short run. Please keep the FE curve constant to show our target level of full employment output or potential output, even though there may be a temporary reduction in labor demand. 4). Last, Illustrate and explain how the economy could reach a full employment level of output if the markets respond quickly. Also, what changes occur in the price level, interest rates, and output as the economy returns to its full employment level?