2) Assume that at time t=0, both E and Y are at their long-run equilibrium levels. Next, assume that a temporary change in preferences results in the reduction of real money demand at t=1, which is reversed at t=2. If the government and central bank want to maintain the full-employment level of real output and minimise exchange rate volatility, what is the optimal policy response according to the DD-AA model? Note: assume prices are fixed in the short run. A) The government temporarily reduces its expenditure. B) The government temporarily increases taxes. C) The central bank temporarily increases the money supply. D) The central bank temporarily reduces the money supply. E) The government permanently reduces its expenditure