Produce an aggregate supply and aggregate demand graph based on the standard macroeconomic assumptions from the textbook. Clearly label each curve and axis. 2. Imagine that there is an increase in deficit spending. Demonstrate what would happen to aggregate supply and/or aggregate demand by drawing the new curve(s). Add arrow(s) from the original to the new curve(s). 3. What happens to equilibrium output? Does it increase, decrease or stay the same? What happens to equilibrium employment? Does it increase, decrease, or stay the same?