you are to illustrate the economy with the appropriately shaped AD-AS curves. Unless explicitly stated otherwise, make the assumption that the economy is at full-employment (Y = Yn).In each case, draw the shift(s) in the AD-AS curves which result from the exogenous actions taken and indicate in the space provided whether each variable will increase (+), decrease (-), remain unchanged (0), or have ambiguous sign (?).Please, number the curves so that the direction of each shift will be clear.Mark the original equilibrium by E₁ the next one by E₂ and so on.Unmarked graphs will be discounted in credit.

Variables:P is the price level, Y is income, i is nominal interest rate, r is real interest rate, U is unemployment, Inf is inflation, I is investment, and BD is budget deficit.

Government increased social spending. OPEC increased oil prices. What are the short-run and the long-run effects of the policy and the event on the following economic variables?

PShort-RunLong-Run

|Y: ______________

|P: ______ ________

|i:______________

|r:______________

|U: ______________

|Inf: ______________

|________________________________ Y I:_______________

BD : _____________