Need Answers of these two Questions.

Question Sheet MWiscal Policy in a Real Intertemporal Model) Suppose the real intertemporal model we studied in week 10. Assume that the demand multiplier is equal to one. a) Use the appropriate graphs to show the effects of an expansionist scal policy (an increase in government spending) on output, labor, real interest rates, and real wages. Explain all changes with words and also the effects on consumption and investment. b) Suppose that the labor supply curve is vertical, i.e., the quantity of labor is xed. In this case, what are the effects of an expansionist scal policy on output, labor, real interest rates, and real wages? Illustrate your answer using graphs. Explain all changes with words and also the effects on consumption and investment. (Him: the new shape of the labor supply curve implies a new shape of the output supply curve) Question 2 (Pandemics and the Real Business Cycles) Suppose an economy in equilibrium. Suddenly, a new virus threatens the population such that most of the jobs must be performed from home. Also, suppose that there is no signicant change in the size of the labor force as people follow safety measures and the virus is more dangerous for individuals out of the labor force. In other words, there is no exogenous change in the labor market. However, working from home reduces the productivity of workers. Moreover, individuals expect this situation to take a long to end. That is, the negative shock in productivity is permanent. a) Use the Monetary Intertemporal model studied in week 11 to analyze the effects of a permanent decline in Total Factor Productivity on output, labor, real interest rates, real wages, and prices. Illustrate your answer using graphs. Explain all changes with words and also the effects on consumption and investment. b) Go to the Fred website and create a graph with the percentage change from a year ago of Real GDP, Employment-Population Ratio, Real Personal Consumption Expenditures, and Real Gross Private Domestic Investment. Restrict the years to start on January 1St of 20] 8. Download the graph and copy it into your answer. Does the behavior of these variables in 2020 agree with the model's predictions in item (a)? c) Go to the FRED website and create a graph with the percentage change from a year ago of the Consumer Price Index for all Urban Consumers and the monetary base. Restrict the years to start on January 1St of 2018. Download the graph and copy it into your answer. Does the behavior of prices in 2020 agree with the model's predictions in item (a)? Could you explain this behavior using the theory of endogenous money? Explain