Instructions: Please read all questions carefully and make sure you understand the facts before you begin answering. Write legibly and be as concise as possible. 1. Using the ISLM model, sho

Instructions:  

Please read all questions carefully and make sure you understand the facts before you begin answering. Write legibly and be as concise as possible. 

1.       Using the ISLM model, show graphically, and explain the effects of a monetary expansion combined with a fiscal contraction. How do the equilibrium level of output and interest rate change? 5 points 

2.       Explain the difference between Keynesian economics and Classical economics by mentioning the complete name of the economist who develops the theory/model. 5 pts

3.       Describe each of the components of the GNP equation and which one you feel can distort GNP the most. 5 pts.

4.       With the topics discussed within Macroeconomics, which topic do you feel is most influential on our nation’s economy?  Describe the topic and then use 5 bullet points to defend your position? 5 pts

5.       Draw the graph of the Keynesian cross model as a comparison of planned and realized expenditures. What is the intercept of the planned expenditure line? What is its slope? If government expenditures would be a positive function of output, how would the Keynesian cross change? 5 pts.