A high level of understanding is demonstrated through the ability to teach others. In this assignment you are to assume that you are writing for a high school student that needs you to teach him or her how to analyze the economy using the Aggregate Demand (AD) and Aggregate Supply (AS) Model (ADAS).Be detailed, specific and clear in your double-spaced, word-processed, textual explanations.

Do all the required readings for Modules 3 - 4 and based on the textbook ADAS Model (which is really an application of the demand/supply model of Micro Chapter 3), answer the following.There is no need to repeat the question as part of your answer - a number followed by an answer will suffice.

1. Assume an economy is at a full-employment equilibrium. Then if Congress passes and the President signs into law $1 trillion in new infrastructure spending, would this, ceteris paribus, be reflected as a change in aggregate demand or a change in aggregate supply? Explain. Be sure to clearly identify a textbook factor of AD or AS that is causing this change.Would this change be an increase or decrease? Explain.Would this change result in the economy moving to a new short-run, below or above full-employment equilibrium?Explain.What do you predict will happen in the short-run to the equilibrium price level, the level of Real GDP and employment in the economy?Explain using textbook concepts and language.
2. Assume an economy is at a full-employment equilibrium to start. Then if there is a world-wide shortage of computer chips that limit the production of many goods, like automobiles, would this, ceteris paribus, be reflected as a change in aggregate demand or a change in aggregate supply? Explain. Be sure to clearly identify a textbook factor of AD or AS that is causing this change. Would this change be an increase or decrease? Explain.Would this change result in the economy moving to a new short-run, below or above full-employment equilibrium?Explain.What do you predict will happen in the short-run to the equilibrium price level, the level of Real GDP and employment in the economy?Explain using textbook concepts and language.
3. If the change in #1 and the change in #2 happened in concert (at exactly the same time), what will be the short-run position of the economy in relationship to its previous full-employment position? Explain. Do you believe the new price level will be higher or lower than the price level before these two events happened together?Do you believe the level of Real GDP will be higher or lower than the level of Real GDP before these two events happened together?Do you believe the level of employment in the economy will be higher or lower than the level of employment in the economy before these events happened together?Explain your answers here in detailed, specific, and clear prose using textbook concepts and language.
4. Draw and submit a fully labeled graph that illustrates the outcome for the economy after both events occur at the same time (that you discussed in #3 above). Provide a legend for your graph as well.

Hint: The changes in #1 and #2 are not both an AD change.The changes in #1 and #2 are not both an AS change.