1) Use the IS-LM model to discuss and answer this question. Suppose there is a simultaneous increase in government spending and increase in the money supply. Explain what effect this particular policy mix will have on output and the interest rate. Based on your analysis, do we know with certainty what effect this policy mix will have on investment? discuss and explain.

2) Discuss and explainin detail what effect a Fed sale of bonds will have on: 1) the LMcurve; and 2) the IS curve.