1. At what rate did US real GDP grow in the first quarter of 2021? Have we now surpassed the pre- pandemic level of real output in the US? One item in the GDP release negatively impacted the overall level of output, but this may be a good thing when we consider the future path of economic activity. What is this item and how can its current reading be a good sign for the future? Comment on the inflation numbers released in the GDP report. Should we be concerned about emerging inflationary pressures? Does your answer to this question depend on whether you are looking at overall inflation or core inflation? Explain. (This question is worth 6 points) 2. If consumption expenditure increases by $60 when disposable income rises by $100, what is the marginal propensity to consume? (This question is worth 1 point) 3. In a Liquidity Trap, when the Federal Reserve increases the money supply, what happens to interest rates? How does this impact the effectiveness of monetary policy in impacting the overall level of output? (This question is worth 2 points) 4. When money demand falls during a period in which income is falling, what happens to interest rates? (This question is worth 1 point)