Assume the United States is operating above full employment.

1. Identify one fiscal policy tool that will solve the problem.
2. Using a correctly drawn and labeled AD/AS graph and loanable funds graph, show and explain how the policy you identified in (a) will affect each of the following in the short-run:
3. output and employment
4. price level
5. interest rates
6. Explain how the policy you identified in (a) will affect each of the following:
7. International value of the dollar
8. American exports (based on the changing value of the dollar)