Answer the following questions about the 2001 U.S. Recession. (Note: for all illustrations, label your curves, axes, and equilibriums clearly.)

(a)Identify the three shocks that led to the 2001 U.S. Recession.

(b)Identify the expansionary fiscal and monetary policy by Congress and the Fed. Be specific about which policies are monetary and which are fiscal.

(c)Illustrate the 2001 U.S. recession using the IS-LM model. Be sure to illustrate the shocks listed in part (a) and the policy effects of listed in part (b). Label the initial equilibrium before the recession, the short-run equilibrium after the shocks from part (a), and the equilibrium after the policy responses in part (b).

(d)Illustrate the effects of the (1) the U.S. recession and (2) the expansionary fiscal and monetary policy on the Aggregate Demand curve. (You can draw this graph in part (c) or have it separate.)

(e)Express in words the effects of the recession on interest rates, prices, output, and unemployment.