Please complete only Question B and Question C, and please provide me with a detailed problem-solving process, thank you very much.

7. Crowding out. In The context of The basic IS schedule 17,: = a 5(Rt 7'), consider a simplified version of The Taylor rule, where monetary policy depends only on short-run output: tint17:17.17]: where>0 0. Draw an lSMP diagram, but instead of The usual MP curve, plot The simplified version of The Taylor rule above. Label This curve MPR for \"monetary policy revised\" rule. Graph The impact of a positive aggregate demand shock on The output gap and The real interest raTe. b. How does The response of The output gap To The demand shock change as 1'; increases? Show The impact of higher 271 graphically and analytically (Hint: To show The effect analytically substitute The MPR into The l8 schedule and solve a 17' r . Greta) c. How does The response of The output gap To The demand shock change if 1'1: 08 Show The impact graphically and analytically. d. Economists refer To the result in The ISMPR diagram as \"crowding out". What gets crowded out and why