We have the following model: 1 (1) Y = -(zC - c1zT - c2 (i - + zl - b2 (i - + G)π²) π²) (IS curve) 1-C₁(1-t)-b₁ Y-yn (2) π = +³+π²₁ Zπ B>0 (PK curve) yn (3) in= zi + d1 (лe - π *) + d1 + (d1ß + d2)zπ Y-Y¹ (RR curve) yn a) Draw the IS curve and the RR curve into a diagram with GDP (Y) on the horizontal axis and the nominal interest rate (i) on the vertical axis and interpret the slope of the two curves. b) Draw the PK curve in a diagram with GDP (Y) on the horizontal axis and inflation (π) on the vertical axis and interpret the slope of this curve. c) Assume that private investment demand is reduced. Show the effect on the Norwegian economy in the two figures mentioned in a) and b). d) Can Norges Bank completely counteract the decline in GDP shown in ic)? Assume that world food prices rise. e) Explain how Norges Bank will react to such a situation in its interest rate setting.