Suppose that new data indicates that the global economy is slowing down, and we are heading for another global recession

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Suppose that new data indicates that the global economy is slowing down, and we are heading for another global recession. As a result, there is pessimism among domestic consumers and investors affecting consumer and investment spending.

A) Show this development using the Aggregate demand/Aggregate Supply (AD-AS) model of the domestic economy.

B) What are the fiscal and monetary policy measures that the policy makers (government and the central bank) can undertake to correct the impact of the fall in spending? (Explain the policy measures in writing. Diagrammatic representation of the effects of these policies not required).

C) What are the possible long run impacts of the recommended policy measures in part B)? (Explain the impact in writing, a diagrammatic representation not required).