Question 1, answer all parts Part A) Part B) Part C) Part D) Refer to the economic data in the table to answer the question. Refer to the diagram below. Economic Data Table S which of the f Unemployment rate 12% Inflation 0% % Change Real GDP -7% Q, Q. Q. 21 Q 1 What fiscal policy tool should be used to respond to this economic condition? C D P Government spending should be increased to speed up the economy. 75 200 350 400 550 650 700 825 Government spending should be reduced to speed up the economy. What happens when the market price increases from $7 to $9? Taxes should be increased in order to slow down the economy. The shortage rises from 350 to 750. The Fed should reduce the fed funds rate to boost the economy. The surplus rises from 350 to 750. The shortage falls from 350 to 750. The surplus falls from 350 to 750. Part E) Part F) The following table lists transactions occurring in a small country. Refer to the table below to answer the question. Small Country Transactions Individuals spend $125,000 on goods and services. Families spend $3 million on new homes. Bulldozers and Cranes Households buy $80,000 of stocks and bonds. Companies pay $400,000 in wages. Opportunity Cost of Bulldozers Opportunity Cost of Cranes Households and firms buy $50,000 worth of imported goods. The government issues $3 million worth of bonds. Country A cranes 15 bulldozers Firms spend $1.5 million on new buildings and equipment. Domestic companies sell $300,000 worth of product overseas. Families spend $750,000 on existing homes. The government spends $10 million on infrastructure improvements. Country B 2 cranes bulldozers Based on this list of transactions, what is the value of the Consumer Spending component of GDP for this small country? Which country has a comparative advantage in cranes? $125,000 $205,000 Country B has a comparative advantage because the opportunity cost is lower. $255,000 $3,255,000 Country A has a comparative advantage because the opportunity cost is lower. Country B has a comparative advantage because the opportunity cost is higher. Country A has a comparative advantage because the opportunity cost is higher