1. Assume macroeconomic policymakers do nothing to try and fix Country Y's economy. Outline two possible long-run outcomes of the current economic crisis, one reflecting the Keynesian view of Aggregate Supply and one reflecting the neo-classical view of Aggregate Supply.

1. The Keynesian view:

1. The neo-classical view:

1. Assume that instead of doing nothing, Country Y's macroeconomic policymakers decide to stimulate aggregate demand using government spending.

1. On the diagram you drew above, illustrate the effect increased government spending would have in increasing the country's income back to its full employment level.

1. Explain the effect that increased government spending could have on solving the macroeconomic problems this country is facing.

1. Besides an increase in government spending, outline two additional policies the government could take that could help reduce the recessionary gap in Country Y.