Answer all of the questions with step by step explanations.

Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to \"Calculate,\" you must show how you arrived at your final answer. Coolway is an open economy that is currently in a recessionary output gap. Coolway's banking system has ample reserves. (a) Draw a correctly labeled graph of the long-run aggregate supply, short-run aggregate supply, and aggregate demand curves, and show each of the following. (i) The current equilibrium real output and price level, labeled as and Y1 and PL, respectively (i) Full-employment output, labeled YF (b) The central bank and the government do not take any policy actions to close the output gap. (i) Explain how the economy will adjust to full employment in the long run. (ii) On your graph in part (a), show how the economy adjusts to full employment in the long run. (c) Suppose Coolway's government is unwilling to wait for the long-run adjustment process. The marginal propensity to consume is 0.8. The equilibrium real output is $500 billion and the full-employment output is $540 billion. (i) Calculate the minimum change and indicate the direction of change in government spending required to shift the aggregate demand curve by the amount of the output gap. Show your work. (ii) Calculate the minimum change and indicate the direction of change in taxes required to shift the aggregate demand curve by the amount of the output gap. Show your work. (d) Assume instead that Coolway's central bank takes actions to restore the economy to full-employment output by influencing investment spending. Draw a correctly labeled graph of the reserve market, and show the effect of the actions taken by the central bank on the policy rate. (e) Coolway and Mexico are trading partners. Draw a correctly labeled graph of the foreign exchange market of Coolway's dollar, and show the effect of the change in the interest rate in part (d) on the value of Coolway''s dollar with respect to the Mexican peso