The Trump administration intends to build a wall along the southern border of the United States. There is much debate concerning the extent to which such a wall would affect immigration and national security, but one thing seems beyond debate: it will require government spending. President Trump requested $5.7 billion for the project from Congress in December. More recently, the Washington Examiner reports, Fisher Industries has offered "to build 218 miles of wall along the U.S.-Mexico border for $3.3 billion and have the entire job completed in 13 months."

Use the five-panel model (i.e., labor market, production function, 45 line, AS-AD, IS-LM) to consider the effects of an increase in current government expenditures on the macroeconomy under the assumption that some (but not all) prices are sticky. Be sure to label your graph completely. Include a key to define all variables used. Provide a brief description. Finally, explain how the economy will transition from the short run equilibrium you have identified to a medium run equilibrium where real output is in line with the available real factors of production and the level of technology.