Need some help

1. (35 points] President Biden has proposed a new economic package for consideration by Congress. It has many elements, but two of the most important are a {essentially} permanent increase in government purchases (via spending on infrastructure} and a (essentially) permanent increase in corporate profits taxes. It is possible that both policy changes would affect the economy in multiple ways, but you should only take account of the specic effects mentioned below. a. Show on a graph how the change in government purchases affects the IS curve. Justify your graph in one or two sentences. b. Graphically derive the impact of the above change on the AD curve, assuming that the MP curve is not changed. c. The increase in corporate profits taxes makes production more costly to businesses. Show on a graph how this change effects the LRAS curve. (You may abstract from the impact of the tax increase on the AD curve.) Justify your graph in one or two sentences. d. How do the changes in parts (b) and (c) affect inflation over the short and long run, if the Fed does not alter the MP curve? Justify your answer using an MAD picture. e. Given your answer in part {d}, what is the appropriate response of monetary policy to these two elements of the Biden proposal? {You may assume that, in the absence of the implementation of the Biden proposal, the economy would be in a longrun equilibrium in which inflation is at the Fed's target of 2%.} Illustrate your answer using an ASAD picture, and explain it verbally. f. What is the overall impact of these two elements of the Biden proposal on private consumption, taking into account the effect of the appropriate monetary policy response in part [d]? Justify your