3. Aggregate Demand comprises 4 components: Consumption (C), Investment (1), Government spending (G), and Net Exports (NE). An exogenous factor that increases any of the components will also ncrease Aggregate Demand. For each of the following, place an X to indicate the one component most directly affected (consider only the primary effect) and an L (decrease) or an R (increase) to show whether the AD curve shifts Left or Right. Factor C I G NE L or R Firms reduce capital expenditures in anticipation of an imminent recession Existing house prices rise Foreign GDP falls as world enters recession Congress increases spending for the current fiscal year Tariffs are imposed by many foreign countries to protect their domestic employment The US Import/Export bank reinstates guarantees for loans to foreign airlines to purchase Boeing aircraft Congress enacts tax incentives for firms purchasing new equipment and facilities Federal Reserve enacts policies to reduce credit card interest rates 4. For each of the following government economic actions, place an X in the table to indicate whether the action is fiscal or monetary policy. Action Monetary Fiscal The federal government reduces home mortgage guarantees The central bank sells mortgage-backed securities (MBS) The US Treasury borrows money to finance increased government spending Congress reduces eligibility for Medicaid The central bank gradually increases the federal funds interest rate Federal income taxes are reduced