Problem 1: Suppose the current price level is 105, and the current level of RGDP is $17.2 trillion. Illustrate each of the following situations on a graph. a. The price level rises to 110, while other variables remain constant. b. Firms become pessimistic and reduce their investment. Assume that the price level remains constant. Problem 2: Briey explain whether you agree or disagree with the following statement: \"Real GDP is currently $17.2 trillion, and potential GDP is $17.4 trillion. If the president would increase government purchases by $200 billion or cut taxes by $200 billion, the economy could be brought to the equilibrium at potential GDP." Problem 3: The 1974-1975 recession clearly illustrates how a supply shock affects the economy. Following the Arab-Israeli War of 1973, the Organization of Petroleum Exporting Countries (OPIC) took action that increased the price of a barrel of oil from less than $3 to more than $IO. Use the information and the statistics in the following table to draw a dynamic aggregate demand and aggregate supply graph showing macroeconomic equilibrium from 1974 and 1975. Assume that aggregate demand curve did not shift. Actual RGDP Potential GDP 1974 5.39 trillion $5.42 trillion s 1975 $5.33 trillion $5.6l trillion