Use an aggregate supply–aggregate demand graph to illustrate the effects on real GDP and the price level of a fiscal stimulus when the economy is in recession.

Use the following information to work Problems 7 and 8.

CBO expects higher long-term deficits The Congressional Budget Office (CBO) says the national debt is on an upward path and will hit 122 percent of GDP in 2040.

Source: The Wall Street Journal, July 12, 2016