Question 11b and 11c (5 marks) The question concerns the below diagram. Interest Rate Interest MS, MS2 Rate G 81 L La 5 Price Level/ Pa P LRAS SAS AD MD ID AD Ia of Money Real Investment SDP b) Do you believe that the policy stance illustrated in the above diagram is relevant for the current economic environment? Can you recommend a more appropriate policy response? (2.5 marks) c) Does your recommendation in part b) have any potential drawbacks? How could those drawbacks be addressed? (2.5 marks) Question 11b and 11c (5 marks) The question concerns the below diagram. Interest Rate Interest MS, MS2 Rate G 81 L La 5 Price Level/ Pa P LRAS SAS AD MD ID AD Ia of Money Real Investment SDP b) Do you believe that the policy stance illustrated in the above diagram is relevant for the current economic environment? Can you recommend a more appropriate policy response? (2.5 marks) c) Does your recommendation in part b) have any potential drawbacks? How could those drawbacks be addressed? (2.5 marks)