Suppose the economy of a hypothetical country has reached its long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. 1. The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now stock market prices begin significant increases, causing peoples' investments, such as their retirement accounts and other investments, to increase in value. People feel very good about the future and use their new- found wealth to buy things that they had been hesitant to purchase in the past. Given this scenario, insert your answers below each of the following questions. a. What kind of economic gap will start to occur (inflationary or recessionary)? (Enter your response here.) causes great loss of business in the hypothetical country, and results in significant unemployment. Given this scenario, insert your answers below each of the following questions. a. What kind of economic gap will start to occur (inflationary or recessionary)? (Enter your response here.) b. What kind of fiscal policy might be helpful to stabilize the economy (expansionary or contractionary)! (Enter your response here.) b. What kind of fiscal policy might be helpful to stabilize the economy (expansionary or contractionary? (Enter your response here.) c. How should these fiscal policy tools be utilized to maximize their effect in stabilizing the economy? (Enter your response here.) c. What specific fiscal policy tools does the government have available and how should these tools be utilized to maximize their effect in stabilizing the economy? (Enter your response here.) d. How would using these fiscal policy tools likely impact the government budget and national debt? (Enter your response here.) d. How should these tools be utilized to maximize their effect in stabilizing the economy? (Enter your response here.) e. What would be the likely impact on the government budget and national debt of the use of these fiscal policy tools? (Enter your response here.) 2. The economy of a hypothetical country has been stable for two or three years with very low unemployment. Wages have been gradually increasing during this time. Now an aggressive policy of increasing tariffs on foreign goods imported into the country results in retaliatory actions from the other countries against the hypothetical country's products and services. This 3. Assume that, in a hypothetical country, coal mining is a significant industry that employs a high proportion of that country's workforce. In a short essay inserted below this question, describe how a significant decline in coal mining, as the country attempts to switch to environmentally safer production, can ripple through the entire economy. Also, identify which fiscal policy tools the govemment can use to reverse the negative effects of the decline in coal mining and how they would combat such negative effects. (Enter your response here.)