1. Draw five aggregate supply and demand graphs at long run equilibrium. Illustrate what would happen to the price level, output and employment under the following circumstances: a. Congress raises tax rates to fight the growing deficit. b. Businesses growing more depressed about future earnings. C. Energy prices rise dramatically across the US. d. Demand-pull inflation sets in. e. Economies of Canada and Mexico (two of our biggest trading partners) fall into recession.

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