The question is as follows:

Q.3. Following the stock market crash in September 2008, there was a large decrease in consumption and investment spending. Assume that the SRAS curve is horizontal. a. Assuming that the economy was in short and long run equilibrium initially, show the new short run equilibrium in the ADSRASLRAS space. What happens to output, prices, and unemployment? b. How do price expectations change so that the economy reaches the new long run equi- librium? c. How does the expansionary monetary policy of the Federal Reserve lead to an alternate long run equilibrium? Compare the effects on output, prices, and unemployment in parts b and c