Part Two Consider the following three scenarios. Respond to the reflection questions related to each scenario with your
suggestions for government action in complete sentences. (3-5)

Scenario 1: The economy is experiencing a 2% increase in the unemployment rate and GDP is falling.

1. Would you need an expansionary or a contractionary monetary policy? Explain.

2. What monetary policies can be used to address this scenario? Explain at least two ways you would use
the tools of monetary policy.

3. What are the benefits and opportunity costs of the changes you propose? Consider the impact on
economic growth, price stability, and unemployment.

Scenario 2: The government is currently spending 3.1 billion dollars on programs and brings in 3.5
billion dollars through taxation.

1. Does this create a budget surplus or deficit? Explain.

2. As a member of Congress, what changes would you suggest to fiscal policy to balance the
budget? Explain at least two ways you would use the tools of fiscal policy to balance the budget by
recommending an "increase or decrease" to cach tool in your explanation

3. What are the benefits and opportunity costs of the changes you propose? Consider the impact on
economic growth, price stability, and unemployment.

Scenario 3: The nation is currently experiencing a period of rising prices. Inflation is making consumer
goods increasingly difficult to afford as wages have remained constant.

1. As a member of Congress, what changes would you suggest to fiscal policy to balance the budget and
indirectly address inflation? Suggest at least two specific changes to revenue and expenditures.

2. What are the benefits and opportunity costs of the changes you propose? Consider the impact on
cconomic growth, price stability, and unemployment.

3. Are the proposed policies contractionary or expansionary? Explain.