Use the graph to answer the following questions.

a. If the Fed does not take any policy action, what will be the level of real GDP and the price level in 2019?
b. If the Fed wants to keep real GDP at its potential level in 2019, should it use an expansionary policy or a contractionary policy? Should the trading desk be buying Treasury bills or selling them?
c. If the Fed takes no policy action, what will be the inflation rate in 2019? If the Fed uses monetary policy to keep real GDP at its potential level, what will be the inflation rate in 2019?

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LRAS2018 LRAS2019 Price lovel (GDP deflator, 2009 - 100) SRAS2018 SRAS 2019 118 116 AD2019 (without policy) 114 AD2019 (with policy) *AD2018 18.3 18.5 $17.9 Real GDP (trillions of 2009 dollars)