1. (10 points) Evaluate the following statement using the models studied in class: \"A fiscal expansion will always reduce investment in an economy\". Is this statement true or false, and why? 2. (10 points) If the government wants to reduce the budget deficit, how can the central bank keep the economy from going into a recession? Use the closed economy is -LM model to illustrate graphically the impact of both the fiscal policy reducing the deficit and the monetary policy, which prevents output from falling. Be sure to label: i. the axes; ii. the curves; iii. the initial equilibrium values; iv. the direction the curves shift; and v. the terminal equilibrium values. 3. (10 points) A decrease in government spending reduces output more in the Keynesian |Cross model than in the IS-LM model. Explain why this is true