In 2024, the U.S. economy is struggling. Unemployment has jumped. Trouble began in January 2023, with a spike in oil prices, generated by terrorist bombing of important production fields in Saudi Arabia. In January 2024, a second blow hits the economy, when households become much more risk averse, as they panic about corporations' high debt levels. The table below provides an incomplete list of macro data. Note: Inflation expectations are derived from the treasury 10-year TIPS spread. The Government borrows virtually all of its funds by issuing 10-year treasury notes. 2022:Q4 2023:Q4 2024:Q4 Crude oil price ($/bbl) $50 Key values: Unemployment 4% 5% 6% LTSG = 2.5% Consumer Price Index (CPI), year-on-year, % change 2.0% 4.8% -1.1% U* =4% CPI: index level 100 It* = 2% CPI, excluding oil, year-on-year, % change 2.00% oil = 10% of CPI Real U.S. output: index level 100 98 96 Phillips curve a = 0.5 Federal Government spending $2.0 trillion $2.2 trillion $2.5 trillion Federal taxes collected $1.7 trillion $1.3 trillion $1.2 trillion corporate borrowing level $200 billion Corporate/Government bond spread 2.00% 2.00% 4.00% 10-year Government bond yield 2.50% 10-year yield minus TIPS yield 2.00% 2.50% 2.00% 1. Assume a standard Phillips curve successfully predicts the CPI: ex-oil. Based upon the information given in the tables above, compute the CPI: ex-oil, for Q4:2023 and Q4:2024 (show your work) (2 points): 2. Use your answers to question #1 (above), and the information in the table to compute the oil price levels for Q4:2023 and Q4:2024. (Show your work) (2 points)AS/AD 1,, -------------- 108 ,0, .I............ m .I............ 99 ,, -------------- 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 1 10 97 95 95 3. In the space provided above label the axes and given the data in the tables above, draw all three curves, and identify equilibrium for (242022. (2 points) 4. Suppose we did not have an oil shock in 2023. Instead, suppose the economy grows at its long term sustainable pace. Using the same space at the top of this page, provide the 2023 AD and AS curves that allow you to depict dynamic equilibrium from Q4:2022 through Q4z2023. (2 points) Corporate Government 200 400 600 800 1000 1200 1400 1600 1800 2000 200 400 600 800 1000 1200 1400 1600 1800 2000 6. We now will consider the full set of events that unfolded, from 2022 through 2024, using our loanable funds diagrams. In the two quadrants above, label the axes and the line in each graph. (2 points) 7. Now, using the information presented in the table at the top of this question, add the additional lines needed to complete the picture for 2022. (Hint: Make sure the lines you add produce the correct equilibrium levels in both quadrants.) (2 points) 8. Consider 2023. Using the graph and the information in the table above, determine the equilibrium levels in the government quadrant, and draw the curves that intersect at this new equilibrium. (2 points)9. Now we consider 2024. Consider the description of the second blow that hits the U.S. economy. What curves would you expect to shift, and in which direction? (2 points) 10. For 2024, using the graph and the information in the table above, determine the equilibrium levels in the government quadrant. (Briey explain) (1 point) 11. Draw the curves that intersect at this new equilibrium. (1 point) 12. Again, for 2024, using the graph and the information in the table above, determine the equilibrium levels in the corporate quadrant. (1 point) 13. Draw the curves that intersect at this new equilibrium. (1 point)