1. The United States is suffering from a high rate of unemployment.

a. Identify two fiscal policy actions that Congress might initiate to solve the problem.

b. Using a correctly labeled AD/AS graph, show and explain how the policies you identified in (a) will affect each of the following in the short run.

i. aggregate demand

ii. output and employment

iii. price level

c. Explain how the policies you identified in part (a) will impact real interest rates in the short run.

d. If the interest rate affect you identified in part (b) continues in the long run, explain how economic growth will be impacted.