Consider the extended IS-LM model analyzed a) Graphically analyze the effect of an increase in the risk premium on demand in the goods market, the IS curve and equilibrium production. Explain briefly. b) If there is no change in fiscal and monetary policy, what will the effects be on consumption and investment? Explain briefly. c) How should fiscal policy react to offset the effect of the rising risk premium on the equilibrium level of production? Suppose there is no change in monetary policy. Represent graphically using IS curves and LM and briefly explain

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