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g] Neat= assume that the Federal government considers to heavily cut spending on NASA projects, such as exploration of the Moon and Mars, in an

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g] Neat= assume that the Federal government considers to heavily cut spending on NASA projects, such as exploration of the Moon and Mars, in an attempt to reduce the U.S. budget decit. Illustrate the potential impact of these actions on the economy using the diagrams you draw for part (t). Please label the new equilibrium {3), compare it to equilibrium (2) and explain the intuition for your results. h} As an alternative way to close the decit, the U.S. Congress considers a tax hike. Assume that the amount of revenues that the new taxes are projected to collect is equal to the amount of budget savings described in part (g). Members of the Congress who introduced the tax bill, claim that the economic eects of their proposal are identical to the effects of the cuts to space exploration. Do you agree Twith their claim? Please explain your answer. Note: you do not have to illustrate your answer to part (h) on your diagrams. i) Does the monetary neutrality hold in the ADAS model? Why? j) Does the monetary neutrality hold in the ISLM model? Why

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