c. According to your diagram, is this economy in an expansion or a recession? Explain. (1. Assume the Federal Reserve decides to take action to try and move the economy back to longrun macroeconomic equilibrium. What are the three ways they would do this using the old tools? e. What are the two ways they would do this using the new tools? f. Would this be expansionary or contractionary monetary policy? g. Show how this policy affects the ADAS model in part (1. Label this new point as point C. 2. A change in the level of imports will impact the macroeconomy. Here we will model an increase in imports, holding all else constant, using the ADAS and look at how monetary policy can try and smooth out the business cycle. Our shock in this question will be: imports decrease, holding all else constant. Let's start with assuming the US was producing at the fullemployment level of output (Yp) with an arbitrary price level (P) before the increase in imports. a. Represent the US economy at this point with an aggregate demand-aggregate supply graph. Label this initial equilibrium as point A