8a. (10 pts) The short-run aggregate supply curve, shows that as the price level rises, firms will increase production. Why is it profitable for firms to increase production in the short run, given the assumptions of the Aggregate Demand and Aggregate Supply (AD/AS) model? b. Using the AD/AS model, show an economy operating at its full employment level of GDP at $10 trillion and at a price level of 100 . What would be the short-run impact on output and the price level, if there were a sharp increase in consumer confidence and spending? Show this on your graph. c. Assume that there is no change to either fiscal or monetary policy, what would be the likely long-run equilibrium level of output and prices? Explain, the cause of any change. 9a. (10 pts) Assume the U.S. is producing at its potential level of GDP and there is a very large decrease in U.S. exports. Show the short-run impact on the economy using an AD/AS model. b. Based on part a., you are asked to recommend a monetary policy solution for this new equilibrium. What policy actions would the central bank most likely take - be specific? c. Provide a detailed explanation of how the central bank's actions would affect banks, the money supply, interest rates, consumers, and firms in the economy. Show the impact of your recommendation on your graph in part a