2. [12 points] In 2020, Turkey has experienced a deep recession (real GDP growth of -10%) and double- digit (around 12%) inflation (the Economist, Nov 21, 2020). (2.a) Are these developments the result of a dominant negative AD shock (such as a drop in consumer confidence) or a negative AS shock (such as a decrease in productivity)? Use the IS/LM/FE model to predict the short-run and long-run effects of this shock on output, the interest rate, and prices. (2.b) In response to this, Turkey's central bank increased interest rates by two percentage points to 10.25%. Use the money market to determine what monetary policy (expansion or contraction) was needed to achieve the increase in interest rates. (2.c) Use the AD/AS model to predict the effects of the combined shocks of (1.a) and (1.b) on Turkey's GDP and the price level. Is the central bank acting as if it is targeting the price level or real GDP? (2.d) Consider Turkey's labor market. What are the effects of the shock in (1.a) on employment, unemployment, and the real wage? How would your answer change if you also consider Turkey's increasing population that is expanding the labor force