Suppose f permanently increases due to a major financial disruption (like widespread bank failure). In the short-run, what happens to equilibrium inflation? O Increases O Decreases O No change(continued) Suppose f permanently increases due to a major financial disruption (like widespread bank failure). In the short-run, what happens to equilibrium output? O Increases O Decreases O No change(continued) Suppose f permanently increases due to a major financial disruption (like widespread bank failure). In the short-run, what happens to equilibrium consumption? O Increases O Decreases O No changeTypically private borrowers have to pay higher interest rates on loans than the government because private borrowers are more likely to default on their loans. Suppose that the demand for investment is given by: I = I-d . (r+f) where f denotes a risk premium that private borrowers have to pay on loans. We will treat f as exogenous and will interpret an increase in f as a negative shock to the financial system. The rest of the model is unchanged. The remaining components of demand are: C = C + mpc . (Y - T) Y = C+I+G r = F t A . T And the short-run aggregate supply equation is: 7 = TTty. ( Y - Y) +p