Macroeconomics 9th Edition by David Colander

Exercise 8

Congratulations! You have been appointed an economic policy adviser to the United States.ou are told that the economy is significantly below its potential output and that the following will happen next year: World income will fall significantly and the price of oil will rise significantly.The United States is an oil importer.)
a.hat will happen to the price level and output Using the AS/AD model, demonstrate your predictions graphically.
b.hat policy might you suggest to the government