EconomicsMonetary and Fiscal Policy, Macroeconomic Fluctuations, and Macroeconomic Equilibrium1. Your Assignment should have a cover sheet with the following information:? Your Name? Course Number? Section Number? Date2. You may submit your Assignment using the Unit 9 Assignment template.3. Your answers should follow the APA format by being in double spaced paragraph format, withcitations to your sources and, at the bottom of your last page, a list of references. Youranswers should also be in Standard English with correct spelling, punctuation, grammar, andstyle.4. Respond to the questions in a thorough manner, providing specific examples of concepts,topics, definitions, and other elements asked for in the questions. Your paper should be highlyorganized, logical, and focused.5. Required Format:? Correct APA format for answers (cover sheet with name, course number, section number,unit number, date, answers double spaced, in Times New Roman 12-point font).AssignmentThis Assignment will assess your knowledge based on the following outcome:GEL-1.1: Demonstrate college-level communication through the composition of original materials.As an assistant researcher in economics, your job is to analyze the impacts of the change in fiscaland monetary policy instruments that accompany the change in economic conditions. Whenaggregate demand or short-run aggregate supply curve shifts, it causes fluctuations in output(GDP). As a result, policymakers sometimes try to offset these AD and AS curve shifts by usingmonetary and fiscal policy instruments. With this in mind, address the Assignment questions onthe impacts of monetary and fiscal policies on aggregate demand and short-run macroeconomicfluctuations. View the Chapter 21: “If It’s Better to have Higher Output and Lower Unemployment,then Why Doesn’t the Government Use Monetary and Fiscal Policy to Expand Aggregate Demandas Much as Possible?” video and the Chapter 22: “Is there Any Way to Measure “ExpectedInflation”?” video.1. Refer to the sets of the aggregate demand, short-run aggregate supply, and long-run aggregatesupply curves. Use the graphs to explain the process and steps by which each of the followingeconomic scenarios will shift the economy from one long-run macroeconomic equilibrium toanother equilibrium. Under each scenario, elaborate the short-run and long-run effects of theshifts in the aggregate demand and aggregate supply curves on the aggregate price level andaggregate output (real GDP).a. Suppose the household wealth decreases due to a decline in the stock market assetprices (see the set of graphs below and pay attention to the 3-stage shifts in graphs[5] [6]).b. Assume the government lowers taxes, which increases the household’s disposableincome. However, the government purchases (spending) remains the same (see the set ofgraphs below and shifts in graphs).2. Suppose the economy of a hypothetical country has reached its long-run macroeconomicequilibrium when each of the following aggregate demand shocks occurs. What kind of gap,inflationary or recessionary gap, will the economy face after the AD shock indicated by the shift inAD curves? What types of fiscal policy instruments will help move the economy back to thepotential level of output (real GDP)? Give specific examples.a. At the long-run macroeconomic equilibrium, the stock market boom occurs and thisincreases the value of stocks households hold (see the set of graphs below and shifts ingraphs in the two-steps).[ BU204 | Macroeconomics ]Page 3 of 4b. The government increases its purchases (spending) due to natural disasters (see the setof graphs below and shifts in graphs).c. Assume the Central Bank reduces the money supply in the economy which leads to anincrease in the interest rates (see the set of graphs below and shifts in graphs).This Assignment deals with how monetary and fiscal policy instruments are utilized to deal withmacroeconomic fluctuations in order to achieve long-run macroeconomic equilibrium throughchanging the aggregate demand (AD) and Aggregate Supply (AS) in the economyComments from Support Team: I can only send you the link for the videos and the chapter.http://www.cengage.com/economics/discipline_content/mankiwanswersvideos/ch29.htmlhttp://www.cengage.com/economics/discipline_content/mankiwanswersvideos/ch30.html