In February 2019, the Chief Economist at the International Monetary Fund (IMF) voiced support for the Federal Reserve's decision to halt further increases in interest rates. Reasons cited include significant and increasing risks for the global outlook. The IMFs chief economist also suggested that the pause in increasing interest rates would positively impact the US economy which was still garnering the benefits of a fiscal stimulus package. 2.1 Assume that the Federal Reserve moved to increase interest rates. Explain the mechanisms by which this could be accomplished. (12 marks) 2.2 Differentiate between a discretionary and rules based fiscal policy. Which category does the use of a fiscal stimulus package fall under? Using the aggregate demand - aggregate supply model, explain the impact of the same a fiscal stimulus package in the short run. (13 marks)