Please may someone explain the question as the answer is provided, but I am struggling to understand the answer, thanks !

* Q13. The country of Hicksonia can be accurately described using IS-LM graphs. Use the IS-LM model to predict the changes to investment, consumption, income and the interest rate in each of the following cases. Consider what the central bank could do in each case to maintain the interest rate at a constant level. (a) The Hicksonians find a huge underground treasure cave, substantially increasing the average asset holdings in the country If A doubles then consumption must increase. This is represented on the graph by an upwards shift in the IS curve. At this higher level of income, the interest rate must be higher in order to clear the money market. With a higher interest rate, the level of investment must fall. In order to keep interest rates constant the central bank must increase the money supply to lower the market clearing interest rate to its initial level. IS1 ISo I.M 1 1 Yo Y1 Y (b) A fall in consumer confidence causes people to save a larger fraction of their income. This is essentially the reverse of the answer to the previous question. Higher saving means a reduction in consumption, shifting the IS curve downwards. Lower income means that in order for the money market to balance a lower interest rate must prevail. This lower interest rate means investment increases, but not by as must as consumption has fallen. In order to keep interest rates constant the central bank would need to reduce the money supply, further reducing output. i ISo IS1 I.M Lo i1 Y1 Yo Y(c) The introduction of contactless credit and debit cards means that people carry less cash. The reduced demand for money shifts the LM curve downward since, at any given level of income and money supply, the interest rate must be lower to achieve money market equilibrium. This raises the level of investment and income. Consumption too increases as income increases. To keep interest rates constant the central bank must reduce the money supply. IS LMo LM Lo i1 Yo Y1