What policy might you suggest to the government

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Reference no: EM13154795

congratulations! You habe neen appointed an exonomic policy advisor to the united states. You are told that the economy is significantly below its potential output and that the following will happen next year: World income will fall signigicantly and the price of oil will rise significantly. ( the united states is an oil improter.)

a) what will happen to the price level and output? Using the AS/AD model, demonstrate your predictions graphically.

b) what policy might you suggest to the government?

Reference no: EM13154795

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