QUESTION TWO [30] 2.1 Monetary policy and fiscal policy often change at the same time. Suppose that the government of a country cut taxes and ran a budget deficit while the central bank of the country pursued a tight monetary policy. Applying the IS-LM model as the basis for your answer, explain the effect this mix should have on the interest rate and output. Use the ONE relevant diagram below to apply to your answer. (12) DIAGRAM A DIAGRAM B 2.2 There are several reasons for market failure. Discuss any three (3) reasons for market failure. (18)