Part 1:

a) Start from a long-run equilibrium, the price level at the long-run equilibrium is $110, and the potential output is $20 trillion. Create the SRAS (short-run : aggregate supply), AD1 (aggregate demand), and LRAS'(Iong'run aggregate su;?p!y graph). No other numbers are necessary besides the price level and the potential output provided to'you. The axes must be labeled correctly and according to the instruction el S AN R e T { b) Suppose the economy faces a recessionary gap; the real output during the recession drops to $19 trillion, and the price level drops to $105. Show the recessionary gap by shifting the correct graph in a well-labeled diagram. Please focus on the short-run equilibrium in the recession (not the long run). Label the short-run equilibrium point B.' c) Can the government close the recessionary gap with a discretionary fiscal policy? Explain in detail - is it a contractionary or an expansionary policy? d) Suppose the quantity demanded at the initial aggregate demand graph AD1 is $20.5 trillion at the price level of $105. Labe{ the point on the AD1 graph that corresponds to Price = $105, point C. If the marginal propensity to consume in this economy is 0.5, then how much should the government change its expenditure to close the recessionary gap? Ensure you show the formula and calculations clearly on a hand-written piece of paper and upload pictures of your calculations; otherwise, you will not earn any pointSA-) Part 2: Please share a monetary or fiscal policy that was implemented in response to COVID-19. Was the policy expansionary or contractionary? Explain in detail how it impacted the aggregate demand graph. No graphs are necessary for part 2, but a detailed explanation in your own words will be needed. Please share a link to any article/webpage you refer to in this regard