Answer
Please see the graphs.
Respectively, the following lines are on the graphs: aggregate long-run supply ($AS_{LR}$), aggregate short-run supply ($AS_{SR}$), aggregate demand ($AD$), and money supply ($MS$).
Work Step by Step
a) Please see graph A. Since the economy has low output, the short run aggregate supply intersects with the aggregate demand. The output at this intersection is lower than the output produced where the long-run aggregate supply and the aggregate demand intersect.
b) The Fed will want the aggregate demand to increase (and recover). Increasing aggregate demand can happen by increasing the supply of money in the market. The Fed can increase the money supply by buying bonds in the market (and releasing money into the market). The money supply can also increase by decreasing the interest rate in the market.
c) Please see graph C. The increased supply of money ($MS_2$) decreases the interest rate.
d) Please see graph D. As the Fed purchases bonds in the market, the supply of money will increase. As the supply of money increases, then the interest rate falls. With the interest rate falling, consumers will increase the aggregate demand. The price level and the output will both increase (from $Y_1$ and $P_1$, respectively, to $Y_2$ and $P_2$).
