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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