Question: 1. The following problem is about the AD/AS model. a. Draw the SRAS, LRAS, and AD curves such that the economy is in a recessionary

1. The following problem is about the AD/AS model.

a. Draw the SRAS, LRAS, and AD curves such that the economy is in a recessionary period.

b. What would happen to the graph you drew above if the federal government used expansionary fiscal policy?

c. What are some of the problems associated with using fiscal policy to try and bring the economy out of a recession? Explain at least three things.

d. In the Great Recession, the Federal Reserve Bank utilized almost every tool in their arsenal to try and end the recession. Explain quantitative easing and why it was used in the Great Recession.

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