1) A) Why would you expectthe inflation rate to increase if the actual unemployment rate declinedto a level lower than the ‘full employment’ unemployment rate(NAIRU) and remained at that low level for a year or longer?  Explain your answer in a few sentences. 4ptsB) Draw an AS/AD diagram illustrating AD and ASshifts that result in a significant increase in the GDP Deflator when AD growthpushes the actual Urate below the level consistent with full employment. Be sure to label all lines and axes in yourdiagram clearly.  2) Donald Trump has claimedthat slashing a variety of regulations on business behavior together with thetax cuts on corporations and on capital gains that he will propose will resultin REAL GDP growth of at least 4% per year. (RGDP growth in the Obama yearsonly averaged 2% per year).If population growth is only.5% per year in the US and immigration is sharply restricted as Trump alsoproposes, what rate of labor productivity growth is needed to achieve 4% realgrowth in GDP?  3)  MostNorthern European countries have a larger % of imports in their retail salesthan the US balanced by a larger share of exports in their RGDP. They also havehigher marginal tax rates and higher levels of government transfer spending onsafety net programs and on government provided medical care than the US.  Explain in detail how these differencesaffect the size of the Aggregate Demand “Multiplier” in these Europeancountries relative to the US AD Multiplier. (No exact absolute value for the multiplier is required in youranswer.)