1. Assume that a country's economy is currently operating at an equilibrium level of production at $800B, and the full employment level is $600B. (a) Draw a correctly labeled graph of the long-run and short-run Phillips curves. Label the current equilibrium as point Z. (b) Draw a correctly labeled graph of the aggregate demand, aggregate supply, and long-run aggregate supply, and show each of the following for the current economic state. i. Current output and price level, labeled as Y1 and PL1, respectively. ii. Full employment output, label Yf. (c) What fiscal policy action can be taken to restore the economy to full employment equilibrium numerically if the MPS is .25? (Show your work) (d) As a result of the fiscal policy action in (c) show graphicly what will happen to the Loanable Funds Market and the real interest rate. (e) Instead of fiscal policy, the FED decides to use open-market operations. What should the FED do to restore full employment equilibrium? (f) Using a correctly labeled graph of the money market, show how the open-market operation you identified in part (b) affects the nominal interest rate in the short run