Please do Q3

112 Final Test Fall 2023 NAME Jimin Meo Answer all questions as well as you can. Remember, brevity is better than BS. Often, one correct word = 1 fact. Lists are appropriate for many answers. Every fact = 1 point. 1. Economic Investment spending is critical to your future. a. What macro sector does this spending? b. What 3 categories of products do they buy? c. Why is it so important for your future? d. How does this Investment spending relate to the LRAS-Long-Run Aggregate Supply? 2. AD-AS graph with LRAS: Draw the graphs to illustrate changes in the following 2 cases. Answer these questions for each graph: a. Which curve shifts - AD or AS? b. In which direction - increase or decrease? c. What kind of policy intervention is this? d. Will this intervention close the gap? CASE 1: The federal CARES Act increased Government purchases G and TR to offset the pandemic recession. CASE 2: The Federal Reserve Bank increases interest rates to dampen inflation in the product markets. 3. Stabilization policy: long-run? a. What are the 3 goals of stabilization policy for the macroeconomy, both short-run and b. Expansionary policy: 1. What is its goal? 2. What tools does the fiscal policy use? 3. In which direction do the tools move? 4. What tools does the monetary policy use? 5. In which direction do the tools move