The composition of the output of the U.S. economy changed radically in WWII, but has since been relatively stable. Since WWII, what proportion of U.S. output is allocated to consumption, versus investment, versus government purchases? (10 points) For decades, the national government has increased its level of spending without increasing taxes to pay for it, hence the large budget deficits and rapidly increasing national debt. Use the tools presented in class (i.e., an IS-LM framework, an AS-AD diagram, and a labor market) to examine the long term impact of an increase in government spending. Specifically, express how you would expect the increase in government spending to impact the economy's employment level, nominal wage level, real wage level, output level, price level, and real interest rate level. (20 points) Present a \"composition of output\" analysis to show how the increase in government purchases noted in the last question will impact the composition of output. Use your results to comment on increased. (15 points) It is nice to have a nominal wage increase, but it is better to have a real wage increase. How fast does the nominal wage of the average worker increase in the U.S.? How fast does the real wage increase? (10 points) Present an analysis (using the IS-LM curves, AS-AD diagram, and labor market diagram) that explains how a technological improvement that increases labor productivity will impact the economy's employm-rit l-\\-/-e-l-,- realwage ivel, output level, and real interest rate level are not effective by an increase in the money supply. (20 points)