1. Consider an economy's aggregate production function exhibits increasing returns to scale due to strategic complementarities (while the production technology is constant- return-to-scale at the individual firm level). Suppose also this economy can be reasonably characterized by the Keynesian coordination failure model we discussed in class. Unlike the case with co-existing good and bad equilibrium, this economy starts with a unique equilibrium in the labor, goods, and money market in the current period are illustrated below. v M} = PL(Y1, r1) 21F (KN) Y1 l > 345,114\" N Explain why the following two shocks may cause the economy to uctuate between a good ecluilibrium with high-output and high-employment and a bad equilibrium with low-output and low-employment? Scenario 1 (5%) At the beginning of the current period, the government announces that it will increase the amount of government expenditure (only) in the current period. Scenario 2 (5%) At the beginning of the current period there is an increase in current TFP from zlto 22. Please typewrite your answers. You should attempt to draw the graphs in MSWord or similar word processing software. Label your graphs. If you absolutely cannot draw graphs in software you can draw them by hand, ensure they are very clear, take a photo/scan and insert