$1.$ Suppose there is a one$-$time increase in the aggregate price level caused by a large increase in oil prices.

Use the Keynesian Cross, the Theory of Liquidity Preference $($the short$-$run money market$),$ the IS$-$LM model to illustrate graphically the short run impact of this shock. Be sure to label: i$.$ the axes; ii$.$ the curves; iii. the initial equilibrium values; iv$.$ the direction the curves shift; and v$.$ the terminal equilibrium values. $(25$ points$)$

$2.$ Two identical countries, Alpha and Beta, can be described by the $\backslash ($ I S $\backslash )-$LM model in the short run. The governments of both countries raise taxes by the same amount. The Central Bank of Alpha targets on holding a constant output level. The Central Bank of Beta targets on holding a constant interest rate. Illustrate and compare the impact of the tax policy on income and interest rates in the two countries using the models of Keynesian Cross, the liquidity preference, and IS$-$LM$.$ Be sure to label: i$.$ the axes; ii$.$ the curves; iii. the initial equilibrium values; iv$.$ the direction the curves shift; and v$.$ the terminal equilibrium values. $(30$ points$)$