1.Use the model of aggregate demand and aggregate supply to illustrate the effects on theU.S. economy of a wave of pessismism in the economy. Be sure to tell me the following:

(a)(1 point) Which curve moves?

(b)(1 point) In which direction does it move?

(c)(1 point) What happens to GDP in the short run?

(d)(1 point) What happens to the price level in the short run?

(e)(1 point) If the Federal Reserve wanted to intervene to stabilize the economy, whatwould they do?

(f)(1 point) If the Federal Reserve wanted to intervene to stabilize the economy, whatwould happen to GDP in the long run?

(g)(1 point) If the Federal Reserve wanted to intervene to stabilize the economy, whatwould happen to the price level in the long run?