Question 6 (12 points) Suppose that the income level in a closed economy falls during a recession. Assume that at the same time, the central bank in the economy significantly increases its level of the open market purchase.

a. (6 points) Use a model of money market and figures to illustrate the short-run impact of the income decrease and the increase in the open market purchase on the equilibrium interest rate. Explain your answer.

b. (6 points) Use a close economy model of the goods market and figures to illustrate the short-run impact of the change of the equilibrium interest rate (due to the income decrease and the increase in the open market purchase in a.) on the output in the economy.

Please draw the graph for part B answer as required by question. Thanks