1. During which phases of the business cycle would fiscal policies that reduce budget deficits (or even increase surpluses) be appropriate?
2. Use the below graphs to answer the following questions assuming the nominal GDP in the economy is given.

Use the below graphs to answer the following questions assuming the nominal GDP in the economy is given. MS3 MS, MS2 Interest rate CO Interest rate (%) 6 W Investmen Dm demand 0 100 200 300 70 120 170 Amount of money Investment ($) demanded and supplied ($) (A) (B) AS Price Level AD3 AD2 AD GDP GDP2 GDP 3 Real Domestic Output (C)