Suppose the economy is in long-run equilibrium, as shown on the following graph. Now suppose a wave of business pessimism reduces aggregate demand. 1. On the following graph, shift a curve or adjust the point to reflect the short-run effect of business pessimism. (Please use the image attached.) 2. If the Fed undertakes expansionary monetary policy, it can? cannot? return the economy to its original inflation rate and original unemployment rate.

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