Problem Set 3 1. Consider the following changes in the macroeconomy. Show how to think about them using the IS curve, and explain how and why GDP is affected in the short run. a The government offers a temporary imrestment tax credit: for each dollar of invest- ment that firms undertake, they receive a credit that reduces the taxes they pay on corporate income. b A booming economy in Europe this year leads to an unexpected increase in the demand by European consumers for U5. goods. as US. consumers develop an infatuation with all things made :in New Zealand and sharply increase their unports from that country. d A housing bubble bursts so that housing prices fall by 20% and new home sales drop sharply