4} Assume the economy of Sweden is in longrun equilibrium. MP8 2 15 {a} Draw a correctly labeled graph of shortrun aggregate supply, longrun aggregate supply, and aggregate demand curves for Sweden, and show the current equilibrium real output, labeled Y1, and the current equilibrium price level, labeled PL1. (b) Assume the United Kingdom decreases its imports from Sweden. On your graph in part (b), show the new equilibrium real output, labeled Y2, and the new equilibrium price level, labeled PL2, as a result of this change. (c) As a result of the decrease in the United Kingdom's imports from Sweden, would policy makers in Sweden be more concerned about cyclical unemployment or inationary pressures in the short run? Explain. {d} lfthe Swedish government's goal is to return the economy to longrun equilibrium, what are two scal policy options"? {e} If the gap is $2IDUIEI and MW: is above, how much would Sweden have to change government spending to close the gap? Show your work. Is itgegatiye or positive change? {f} lfthe gap is $2008 and MPG is above, how much would Sweden have to change taxes to close the gap? Show your work. Is it negative or positive change? (g) Is the change in taxes larger, smaller or the same as the change in government spending\"? Why? Or if you choose, is a change in government spending or taxes more effectivei'powerful. Explain your answer. 5) Assume Smithland is in short-run equilibrium at a level of output that exceeds the full-employment level of output. (a) Draw a correctly labeled graph of the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves, and show each of the following. (i) The current equilibrium real output and price level, labeled Y1 and PL1, respectively (ii) The full-employment output, labeled YF (b) Assume Smithland's government cuts individual income taxes. On your graph in part (a), show the short-run effect of the tax cut on equilibrium real output, labeling the new short-run equilibrium real output Y2. (c) Based solely on the change in real output on your graph in part (b), what will happen to each of the following in the short run? (i) The natural rate of unemployment (ii) Nominal interest rates. Explain