Price level (GDP deflator, 1996-100) 130 120 110 100 90 0 9.0 LAS SAS AD 9.5 10.0 10.5 11.0 11.5 Real GDP (trillions of

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Price Level Gdp Deflator 1996 100 130 120 110 100 90 0 9 0 Las Sas Ad 9 5 10 0 10 5 11 0 11 5 Real Gdp Trillions Of 1 (44.36 KiB) Viewed 45 times

Price level (GDP deflator, 1996-100) 130 120 110 100 90 0 9.0 LAS SAS AD 9.5 10.0 10.5 11.0 11.5 Real GDP (trillions of 1996 dollars) Question 3: Potential GDP for the economy in the picture is $10 trillion dollars. a) [1 point] Does this country have an unemployment problem or an inflation problem? b) [2 points] What monetary policy action would you advise the central bank to take to fix the problem in (a)? c) [2 points] If the central bank listens to your advice, what will be the effect of that policy action on aggregate demand and supply curves? How will the real GDP and prices respond to the policy change?