4.6 During the 1990s, changes in technology lowered costs. Use the IS-MP model, including the Phillips curve, to analyze the situations described below. a. Suppose the Fed does not change the real interest rate following this positive supply shock. What will happen to the inflation rate? b. Draw a graph to show what actions the Fed can take if it decides to keep the inflation rate constant. 4.7 Suppose that rather than expectations being strictly adaptive, increases in the money sup- ply cause the expected inflation rate to increase immediately. a. In this case, when the Fed increases the money supply, what happens to long-term real interest rates? b. How does the link between money supply increases and expected inflation change the Fed's ability to affect the economy through the interest rate channel