1. Use aggregate demand and aggregate supply analysis to determine what would happen to real output (Y) and the price level (P) if the following conditions change.In answering this question, you need to identify whether the aggregate demand or aggregate supply curve is shifting, determine the direction of change, and find the new macroeconomic equilibrium.Use a separate graph for each new scenario, and explain each answer in words.

1. The government sharply reduces its expenditures without cutting taxes.
2. Firms have increasingly positive expectations that profits will be high for the foreseeable future.
3. Nominal wages rise 2% and labor productivity rises 3%.
4. The price of imported oil rises by 20% from $50 a barrel to $60 a barrel.

2.For each of the following, state whether it is considered money in the US.Explain why or why not?

a.Check you write against deposits you have in an American bank.

b.Brazilian reals

c.The available credit you have in your Master Card.

d.Reserves held by banks at the Federal Reserve Bank

e.Federal notes in your wallet

f.Gold bullion

g.Grocery store coupons

h.A bitcoin account.

3.The Central Bank of the country you are studying announces that it will buy back $100 million government bonds from the country's banking system.

a.What will be the initial effect of this policy on the banking systems' monetary reserves?

b.If the reserve ratio of the country's banking system is 20% and the nation's banks normally lend the maximum amount they are legally allowed to do, what will be the initial change in the value of the banking systems' loans?

c.Use the money multiplier to find the total effect of this monetary policy on the money supply in the country.

d.What will happen to interest rates?

e.Draw a short run aggregate supply curve and an aggregate demand curve with the appropriate levels.

f.Use the graph you have drawn to show how macroeconomic equilibrium changes as a result the monetary policy we have been discussing.