a) Start from A and illustrate how the shock will affect the economy. Call this new equilibrium B. [Assume that the effect of the change in the interest rate on the money demand is stronger than the effect of the change in output]. b) After the shock has hit the economy, the government decides to reduce government spending from 1 to 2, with 2 < 1. Explain, using equations and diagrams, how the economy will move from equilibrium B to a new equilibrium C. [Assume that the effect of the change in the interest rate on the money demand is stronger than the effect of the change in output]