Part a; explain how government spending affects GDP (using the GDP equation will help you do that). Part b; indicate how government spending affects the private sector for both war goods and consumer goods, i.e., do they increase, decrease, or stay the same - answer for each type of good. Part c; describe how government spending has stimulated or hindered the U.S. economy during a wartime period (use World War II for this part of the question).

Part a; indicate if there are any tradeoffs between inflation and unemployment when using fiscal and monetary policies and how each of these policies affects inflation and unemployment, i.e., tell me how expansionary fiscal policy and expansionary monetary policy affect inflation and unemployment and how contractionary fiscal policy and contractionary monetary policy affect inflation and unemployment. Part b; indicate which of the following situations is more of a problem for long-term economic growth, persistent inflation or unemployment, and explain why you believe that to be the case.