raditional monetary and fiscal policythe IS-LM view Consider an economy described by Figure 9.9, with output lower than the natural level of output and the nominal interest rate at zero. a. Draw Figure 9.9 using the LM curve passing through point A. b. If the Federal Reserve increases the money supply, what will happen to the IS-LM diagram you drew in part (a)? Will equilibrium output move closer to the natural level? c. Given your answer to part (b), what policy options are available to the government to try to increase output? Consider traditional policy options only, and not financial policies. How does your answer relate to the policy decisions of the Labor government in 2009