Question 1 (25 points in total) The economy of Riceland is in long-run equilibrium. a. (7 points) Using the model of AD/AS, draw a graph to show the state of the economy. Be sure to show the three curves - aggregate demand, short-run aggregate supply, and long-run aggregate supply. Remember to label your graph clearly. b. (8 points) There is a positive weather-related shock in Riceland. In particular, the monsoon rains come ahead of time and the plentiful rains lead to a very good rice harvest. Using the mechanics of the AD/AS model, clearly show on the graph from part (a) what happens to the level of output and the price level in the short run as a result of the weather-related shock. c. (10 points) The federal reserve bank of Riceland decides to implement a stabilization policy to minimize the short-run fluctuations in the economy. Name one stabilization policy that would work here. Using your graph from part (a), show how the economy gets back to a long run equilibrium using the policy intervention. Clearly show on the graph what happens to the level of output and the price level in the long run