please answer this question worth 6 marks. Please make sure to use AD-AS model to illustrate this.

Q3. The debate over austeritywhether a country in debt should cut public spend- ing. raise taxes. or bothhas dominated European policy circles since the continent's 2 .4 t I. E'fn no" lulu III H i .. A ttl tl HIM 2M euro ems Ella] 'IbI Figure 1: Effective federal funds rate sovereign debt crisis began at the end of am For its proponents. scal cmsolidav tion is the only way to restorebusiness confidence. thus creating incentives for further investment and growth For its opponents. austerity is only going to make matters worse. taking more demand out of the economy and reducing growth opportunities Using the ARAB framework. explain what happens to output and the price level when an economy implements an austerity policy in the short rm and long run Since the Eurcpean Central Bank conducts monetary policy for many European economies. you can assume this economy implements the austerity plan without an accompany- ing change in monetary policy [ti outfits]