Please answer the following (a) (b) (c) (d).

Year Potential Real GDP Real GDP Price Level Federal Funds Rate 2006 $15.3 trillion $15.3 trillion 90.1 5.0% 2007 $15.6 trillion $15.6 trillion 92.5 5.0% 2008 $15.9 trillion $15.6 trillion 94.3 1.9% 2009 $16.1 trillion $15.2 trillion 95.0 0.2% 2010 $16.3 trillion $15.6 trillion 96.1 0.2% 2011 $16.5 trillion $15.8 trillion 98.1 0.1% 2012 $16.7 trillion $16.2 trillion 100.0 0.1% 2013 $17.0 trillion $16.5 trillion 101.6 0.1% 2014 $17.3 trillion $16.9 trillion 103.6 0.1% 2015 $17.6 trillion $17.4 trillion 104.7 0.1% 2016 $17.9 trillion $17.7 trillion 106.8 0.4% 2017 $18.2 trillion $18.1 trillion 107.8 1.0% 2018 $18.5 trillion $18.6 trillion 110.4 1.8% a) Does the AD curve shift to the right more or less than the LRAS curve in a dynamic AD-AS model from 2006 to 2007? (1 marks) Explain why verbally. (1 marks) b) Explain why the Federate Funds Rate declines from 2007 to 2009 using Taylor Rule. (2 marks) Based on the Federate Funds Rate data in the table, explain the limitation of monetary policy that is implemented through open market operation during severe recession. (2 marks) c) Suppose a military operation that costs $200 billion in 2011 can help the real GDP recover to $16.2 trillion one year earlier. What is the minimal required MPC of households in the Aggregate Expenditure model if there is no tax wedge on household income? (2 marks) What if the tax wedge is 1/3 of the pretax household income? (2 marks) What is the difference between the answer based on the Aggregate Expenditure model and the answer based on the static AD-AS model. (2 marks) d) There was large fiscal stimulus during 2009-2011. People believe that fiscal stimulus is more powerful in 2011 compared to 2017. Explain why this can be true using the Federal Funds Rate data