1.The economy has seen the unemployment rate increase from 5.7% to 9.5% due to the Covid-19 crisis. During the same period, the rate of inflation declined from 1.9% to 0.7%, and the government had a budget deficit. The government wants to use fiscal policy to spur rapid growth of real GDP. It is weighing whether to spend more on infrastructure programs or to cut income taxes. (20 marks)

a)Explain and use appropriate graph(s) to show the short- and long-run effects of new infrastructure expenditure. (5 marks)