a. problem? Price level (GDP deflator, 1996-100) LAS 120 EX 110 100 130 8 0 SAS 9.0 9.5 10.0 10.5 11.0 11.5 Reel GOP (ritions of 1996 dollars) Does the country in the above graph have an unemployment or an inflation AD
a. problem? Price level (GDP deflator, 1996-100) LAS 120 EX 110 100 130 8 0 SAS 9.0 9.5 10.0 10.5 11.0 11.5 Reel GOP (ritions of 1996 dollars) Does the country in the above graph have an unemployment or an inflation AD
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Question 1:
a.
b.
C.
Price level (GDP deflator, 1996-100)
LAS
120
EX
110
130
8 8
100
90
0
9.0
SAS
AD
9.5 10.0 10.5 11.0 11.5
Real GDP fritions of 1996 dollar)
Does the country in the above graph have an unemployment or an inflation
problem?
What fiscal policy action would you advise the government to take to fix the
problem in (a)?
If the government listens to your advice, what will be the effect of that policy
action on aggregate demand and supply curves? How will the real GDP and prices
respond to the policy change?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc7fd8e2c-9161-4992-8146-a9377d374d45%2Fc07f638c-8b8a-40eb-9212-036c9e87251f%2F5164kps_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 1:
a.
b.
C.
Price level (GDP deflator, 1996-100)
LAS
120
EX
110
130
8 8
100
90
0
9.0
SAS
AD
9.5 10.0 10.5 11.0 11.5
Real GDP fritions of 1996 dollar)
Does the country in the above graph have an unemployment or an inflation
problem?
What fiscal policy action would you advise the government to take to fix the
problem in (a)?
If the government listens to your advice, what will be the effect of that policy
action on aggregate demand and supply curves? How will the real GDP and prices
respond to the policy change?
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