The following equations describe the economy in Country A in 2019. Consumption C = 1000 + 0.6Yd 4001" Investment 1 = 250 500r Government spending G = 500 Exports X = 1500 Imports M = 500 + 0.4V Income tax rate t = 0.2 Money demand Md = 1000 250i Money supply Ms = 985 Expected ination rate so = 0.05 where Yd is disposable income, i is nominal interest rate, and r is the real interest rate. d. The nal term in the equation describing investment, -500r, implies that a 1 percent (0.01) increase in the real interest rate reduces investment spending by 500(0.01} = 5 units. Similarly, the nal term in the equation describing consumption, -400r, implies that a 1 percent (0.01) increase in the real interest rate reduces consumption spending by 400(001) = 4 units. Briey explain how the effectiveness of a monetary policy depends on the responsiveness of planned investment towards changes in real interest rate as well as on the responsiveness of consumption spending towards changes in real interest rate. (10 marks)