1. suppose there is an increase in immigration that leads to an increase in the supply of labor. What happens to the real wage rate and the full employment level of output? There is an AD-AS model, describes what happens to output and prices in the short run?

2. With a large and growing government budget deficit, the Feds may face pressure from the goverment to act. Use the IS-LM-FE model to illustrate the effects of a goverment budget and what the Feds can do to counter the consequences of a budget deficit. What would happen to the interest rate in the long run?