1.For each of the following explain which (if any) of the curves from the AD-AS model will be affected and in which direction:

1. Autonomous Monetary Policy easing by the central bank
2. decrease in Financial Frictions
3. Workers expect lower inflation
4. Positive Output Gap
5. Productivity Increases

2.Using the aggregate demand aggregate supply graph, show and describe the effects on RealGDP(Y), Unemployment (U) and Infation (() in the short run and long run if:

1. Unemployment rate is below the natural rate of unemployment
2. A temporary negative supply shock
3. Negative temporary supply shock accompanied by a decline in Investment by firms