1. Draw five aggregate supply and demand graphs at long run equilibrium. Illustrate what would happen to the price level, output and employment under the following circumstances:

1)Congress raises tax rates to fight the growing deficit.

2)Businesses growing more depressed about future earnings.

3)Energy prices rise dramatically across the US.

4)Demand-pull inflation sets in.

5)Economies of Canada and Mexico (two of our biggest trading partners) fall into

recession.