1. Consider an economy's aggregate production function exhibits increasing returns to scale due to strategic complementarities (while the production technology is constant- return-to-scale at the individual firm level). Suppose also this economy can be reasonably characterized by the Keynesian coordination failure model we discussed in class. Unlike the case with co-existing good and bad equilibrium, this economy starts with a unique equilibrium in the labor, goods, and money market in the current period are illustrated below. W Nd NS ( 7 1 ) W1 r1 YS Yd N1 N Y1 P V Subtitle MS Ma = PL(Y1, 71) ZAF (K, N) Y1 P1 M1 MS, Ma N1 N Explain why the following two shocks may cause the economy to fluctuate between a good equilibrium with high-output and high-employment and a bad equilibrium with low-output and low-employment