Table 18-6 -Refer to Table 18-6

question 167

Essay

Table 18-6
$\begin{array}{|c|c|c|c|}\hline \text { Year } & \text { Potential Real GDP } & \text { Real GDP } & \text { Price Level } \\\hline 1 & \$ 11.0 \text { trillion } & \$ 11.0 \text { trillion } & 100 \\\hline 2 & 11.5 \text { trillion } & 11.7 \text { trillion } & 109 \\\hline\end{array}$
-Refer to Table 18-6.Suppose the economy is in the state described by the table above.What problem will occur in the economy if no policy is pursued? What fiscal policy tools could be used to combat the problem? Draw a dynamic aggregate demand and aggregate supply diagram to illustrate the appropriate fiscal policy to use in this situation.

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Definitions:

Earnings Ratio

A financial metric comparing one aspect of a company's financial performance, such as earnings, to another, such as its share price.

Full-time Workers

Employees who work a standard workweek, typically 30 to 40 hours, and are often eligible for benefits such as healthcare.

Employment Discrimination

Unfair treatment of employees or job applicants based on race, gender, age, religion, nationality, physical ability, or other characteristics irrelevant to job performance.

Productivity Factors

Variables that influence the output of production, including the quality of labor, technology, and the efficiency of processes.