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ANALYSIS: Upload your answer on iLearn, (if you prefer to submit your written responses in the space below, you can do that. Just remember to upload graphs on iLearn). This is a 4 part question (covers ch.9): [10 points total] Analyze the SR and LR impact of a RISE in TAXES (T) on the economy. Assume that the economy starts in General Equilibrium. This is an income tax (T). a. [5 points] What is the impact on economic activity in Short Run (SR)_ONLY? Provide a detailed discussion (with economic reasoning of the transmission mechanism) of the impact that includes the effect on Y, r, I, C, and L(i,Y). NO GRAPH! Elaborate on your answer. b. [3 points] Now show the impact of the rise in consumer/investor optimism in the SR on the IS-LM diagram and the AD-AS diagram. No discussion. (show SR only!). c. [1.5 point] Once the economy is in the LR, what is the impact on P, r, and Y? Just state whether each is higher, lower, or unchanged compared to its initial position. (no intuition needed; no graph). d. [0.5 point] How is the adjustment in the Price Level over time illustrated in the AD-AS diagram? Movement along AD or shift in AD? Just pick one; state it