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Q2. Consider an economy that is initially in a long-run equilibrium at point 1 in the graphs below. (Like last question, you can draw the lines/boxes to on the diagram below. To label a point, you can use Insert-Shapes-Oval to get a small dot.} 1) 2) 3) LRA s1 LRPC1 Suppose that, starting from point 1, the Fed chooses to ease monetary policy given the current crisis. Shift the appropriate curve(s) in the graphs above. Label the new short-run equilibrium as point 2 in all ve graphs. Suppose there are no more changes in monetary policy and the economy returns to long-run equilibrium through the self-correcting mechanism. Will the level ofinflation in the new long- run equilibrium be higher, lower, or unchanged from the original level 1:1? (You do n_ot need to shift curves or show the new long-run equilibrium on the graphs. Just write the answer below.) Answer: Will the real interest rate in the new long-run equilibrium be higher, lower, or unchanged from the original level r1