\f1. Consider the scenario and information given below. This essay will consist of three graphs and three paragraphs rogardless of if policy is used or not. Events of the Past 18 months: Total spending has bcen harming. Unemployment rates have been decreasing but have recently stopped changing, and are at 4.25%, participation rate is at TWA. Real GDP in the economy increased by $3M billion for the fnst 9 months but has been stable for the last 9 months at $28.2 Trillion, an all-time record. Price levels have risen during the past 18 months and the current rate of ination is at 3.3% Currently Interest rates are moderate and somewhat responsive to changes in MI. Leading Indicator Information During the past ti weeks, the values of stocks in the Dow Jones hidustrial average, the NASDAQ and the Fortune Silt] have been gradually decreasing. The number of new construction starts, orders for new nished capital resources and number of orders for new durable goods have dropped over past 3 months. There has been a slow rise in the number of new unenlpi'oynrenr' insurance claims led during the past to weeks; and the average work week dropped from 29 to 25 hours steadily. Consumer Condence Sr Business Outlook have dropped below 4r? (3?, 35, end 23) over the past 3 months. Demonstrate what has happened during the past 13 months on anADrAS graph. Construct an lelle graph based on current interest rate information. 1Write a paragraph explaining what is happening and determine if there is a problem in the economy. If there is a problem, clearly state what it is. Consider the Leading Indicator Information and determine what it predicts about changes in total spending. In a paragraph, analyze each of them, what the majority predicts and determine if Macmeconornic Policy should be used, stating why or why not. HMoo'oeconoode Policy is appropriate, write a porogropn recommending Macroeconomic Policy to help romedy this situation. He sure to indicate which kind and mode of Macroeconomic Policy is used, which tools are used and give specifics on how they will be used, including impact on relevant macroeconomic variables. Additionally, show and summarize the effects of it on nnotner ADIAS graph. Also show the effect on the earlier constructed MIMI] graph where applicable. If Mocmecononric Potter is not appropriate, instead write a paragraph to explain why it's not appropriate. Additionally, snow and summarize from Inn! is die core on another ADXAS grnpn. Write a detailed emjr on the following: Discuss in some detail the two worst problems associated with Fiscal policy's use, and contrast them with its two greatest strengths. Discuss in some detail the two worst problems associated M'lu' Policy... and contrast them with its two greatest strengla m it comes to the use of any kind of macroeconomic policy, what important considerations should an}; policymakers remember and followi-r though on? 4. Consider the Cumulated Balance Sheets for the Federal Reserve System and the Commercial Banking 3 stem. Commercial Rankin S .- cm \"W \"ff\" = $1 Elli billion = $231} billion Federal Reserve 5 stem Assets Liabilities ..... are = $240 billion = SIN? billion = $50 billion Currency in C' ulation = $i billion Show the effect of the following transactions on the balance sheets for the FED and the Commacial Banking System. Use tile balance street answer tables pmvided by the instructor, and be sure to write is penc. Show only the item that change, the amoUnt and direction of the changes, and show the new value for the items that changed. Also, note whether the transaction causes the money supply (Ml) to shift left or shift right. Do not clft' answers. Be sure to give all answers for changes and new entries in billions of US Dollars [$}. Loans = $70 billion Curran = $41} billion Tl. __ T2. Commercial Banks GREEK $11} Billion in additional Currency FROM THE FED. T3. Due to an increase in 1's and (:3; Commercial Banks pay of $21 billion in outstanding Loensfmin Federal Rewrite. T4. The Federal Reserve sells $15 billion worth of securities to the Commercial Banking Sysmm