The world consists of two large economies- planets called Arrakis and Caladan. Write down the equation that determines the world real interest rate. Arrakis is running current account surplus. Plot the savings and investment graph for both economies. What is the relationship between the current accounts of Arrakis and Caladan? a) Who determines the nation's money supply? What is the Quantity Theory of Money? Describe in a few words and provide the equation. If output is growing at 2% and velocity is fixed, what is the relationship between money supply and prices related according to the Quantity Theory of Money? b) How do Keynesian and classical economist differ in their beliefs about how long it takes the economy to reach long-run equilibrium? What implication do these differences have on economic policy recommendations? With the AD-AS graph show types of shocks classical economist think is most prevalent. c) Use the IS-LM graph to describe the short run impact of increase in government taxes on the interest rate, income, consumption, and investment