PRINCIPLES OF MACROECONOMICSQUIZ #5 ANSWERS – COVERING CHAPTERS 12-14INSTRUCTIONS:Please show your work.Each question is worth 3points each.On the day that the quizzes are due, you will grade your own quiz in classand then turn it in to me at the end of class. We will begoing over the quiztogether. The answer key will be posted in eLearning after the quiz is handedin.Please bring a red pen to class on grading day. I expect everyone touphold their academic excellence and grade there quizzes honestly – there iszero tolerance with respect to academic dishonesty. Late quizzes will receivea zero. However, if you cannot make it to class, please email your quiz to theTA and he will grade it.1.Describe the chain of events that are likely to unfold when the government increasesspending. Explain your answer in terms of its impact on aggregate output, the demand formoney, the interest rate and planned investment. What is the crowding out affect? Howcan it be fixed?2.