The graphs on the right illustrate the /S-LM-PC model with a given real interest Graph A rate (LM) and Phillip's curve (PC). Real interest rate, r If this economy is currently experiencing a positive output gap, what do you know about the location of the IS curve? In graph A, draw the /S curve that would result from a positive output gap. Then show the economy's resulting location on the Phillip's curve in graph B. 1.) Using the 3-point curved line drawing tool, in graph A, draw the IS curve that reflects the economy having a positive output gap. Label your curve 'IS'. 2.) Using the point drawing tool, in graph B, draw the location of the economy along the Phillip's curve. Label your point 'A'. LM Carefully follow the instructions above and only draw the required objects. YS Suppose the economy had initially been at potential output where IS crossed LM 3 4 5 8 9 10 at Y. Output, Y (trillions of dollars) Which of the following events could have caused the positive output gap that you Graph B indicated on the graph? (Check all that apply.) Change in inflation rate A. A decrease in the risk premium, x. B. An increase in the risk premium, x. / PC C. A decrease in government spending. OD. A decrease in the tax rate