Question: Current macroeconomic situation in county X is shown on graph below. Help this economy move back to full employment at 10 trillion real GDP by

Current macroeconomic situation in county X is shown on graph below. Help this economy move back to full employment at 10 trillion real GDP by answering the following questions.

I. Is country X facing a) Recessionary gap, or b) Inflationary gap?

II. Country X should use, a) Expansionary, or b) Contractionary Fiscal Policy.

III. How would your chosen fiscal policy be implemented?

IV. Will a successful implementation of the policy in part III result in a shift in AD or SRAS, explain why.

Current macroeconomic situation in county X is shown on graph below. Help

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