The United States is suffering from a high rate of unemployment.

1. Identify two fiscal policy actions that Congress might initiate to solve the problem.
2. Using a correctly labeled AD/AS graph, show and explain how the policies you identified in (a) will affect each of the following in the short-run.
3. aggregate demand
4. output and employment
5. price level
6. Explain how the policies you identified in part (a) will impact real interest rates in the short-run.
7. If the interest rate effect you identified in part (c) continues in the long run, explain how economic growth will be impacted.