This is an essay problem requiring three graphs and three paragraphs regardless of if policy is used or not. If appropriate, only Fiscal Policy will be used. Consider the scenario and information given below: Events of the Past 18 Months: Total Spending has steadily declined by about $500 billion or 2.5% of GDP during the past year, much if it Consumer declines. Real GDP has decreased steadily and is far below potential GDP (Real GDP,) Unemployment rates have increased well above 6.00% due to many factories laying off workers due to slow sales. Price levels have fallen during the previous year and have stabilized during the past 3 months at a low level for this decade. Currently interest rates are low and not at all responsive to changes in the M1 money supply. Leading Indicator Data Stock indices like the DJI and Nasdaq have continued to drop the past 30 days. Orders for new durable goods and finished capital resources have decreased during the past 6 weeks. Retailer inventories have risen due to slow sales for the past 45 days. Construction has been in decline the past 6 months, and Unemployment Insurance applications have increased the past 16 weeks. Consumer confidence has dropped the past 3 months. Demonstrate what has happened during the past 18 months on an AD/AS graph. Construct an M1/MD graph based on current interest rate information. Write a paragraph explaining what is happening and determine if there is a problem in the economy. If there is a problem, clearly state what it is. b. Consider the Leading Indicator Information and determine what it predicts about changes in total spending. Analyze them; determine if Fiscal Policy is appropriate at this time. Write a paragraph explaining why or why not coherently. If Fiscal Policy is not appropriate, explain why it is not appropriate. C. If appropriate, recommend Fiscal Policy to help remedy this situation. Be sure to indicate which mode of Fiscal Policy used, which tools are used and give specifics on method of use; include parts of total spending affected and impact on relevant macroeconomic variables. Show these effects of it on another AD/AS graph. If Fiscal Policy is not appropriate, explain why, and how why on another AD/AS graph. All explanations will be written in a paragraph. 2. This is an essay problem requiring three graphs and three paragraphs. If appropriate, only Monetary Policy will be used. Consider the situation the economy is facing: Events of the Past 18 Months: Total spending has been increasing and has shown no signs of stopping. Production levels have risen up to full employment full production levels and have apparently reached capacity, along with very ow unemployment rates. Price levels have been rising like crazy and have shown no signs of stopping, with the rate of inflation at 8%. Currently Interest rates are high and are very responsive to changes in the M1 money supply. Leading Indicator Data Vendor delivery performance has slowed down by 2 days due to Vendors having so many orders to fill The Dow Jones Industrial Average has passed 23,000 after rising for the past 30 days, and stock indices have risen as well New housing starts, building permit applications and orders for new durable goods, and finished capital resources have xperienced large increases during the past year. Consumers, and business owners/CEOs, are becoming worried about a serious problem with inflation. a. Demonstrate what has happened during the past 18 months on an AD/AS graph. Construct an M1/MD graph based on current interest rate information. Write a paragraph explaining what is happening and determine if there is a problem in the economy. If here is a problem, clearly state what it is. b. Consider the Leading Indicator Information and determine what it predicts about changes in total spending. In a paragraph, analyze each of them, what the majority predicts and determine if Monetary Policy should be used, stating why or why not. C . If Monetary Policy is appropriate at this time, recommend which mode of Monetary Policy would be used, which tools would be used, how they would be used, and how they would affect M1, and other relevant macroeconomic variables. Additionally, show these effects on the two graphs- M1/MD for effects of Monetary policy on M1 and i, and then another AD/AS graph for after Monetary policy is effective, and summarize these effects in a paragraph. If Monetary Policy is not appropriate, write a paragraphs explaining why and show why on an AD/AS graph 3. Consider the balance sheet below for Gold Rush Bank, NA. (a/k/a GRB)