1. Use AD and AS curves to explain the effects on the equilibrium price level and equilibrium level of output in the short run.~ (a) A contractionary fiscal policy with the economy operating near full capacity. (b) An expansionary monetary policy during a period of high unemployment and excess industrial capacity. (c) A strong hurricane destroys energy plants which cause energy prices to increase, assuming that the Fed attempts to keep interest rates constant by accommodating inflation. (d) The federal government pursues a contractionary fiscal policy while the Fed acts to keep output from falling. 2. The following data represent the economy of Yahooland: C=1000+0.5Ya, T=200, G=400, I=500- (a) Calculate the equilibrium level of output. Graph your solution.~ (b) If the government spending increases by 400 what is the new equilibrium level of output? Use the government spending multiplier.~ (c) If the government increases taxes by 400 what is the new equilibrium level of output? Use the tax multiplier.~ (d) If the government increases taxes and spending by 400 what is the new equilibrium level of output?