(34 marks) The hypothetical information in the following table shows what the situation will be in 2018 if the RBA does not use monetary policy. YEAR POTANTIAL GDP REAL GDP PRICE LEVEL 2017 $1700 billion $1700 billion 110 2018 $1800 billion $1780 billion 114 If the RBA wants to keep real GDP at its potential level in 2018, should it use an expansionary policy or a contractionary policy? Should the RBA be buying financial securities or selling them? (10 marks) If the RBA's policy is successful in keeping real GDP at its potential level in 2018, state whether each of the following will be higher, lower or the same as it would have been if the RBA had taken no action. (10 marks) Real GDP ii. Potential GDP iii. The inflation rate iv. The unemployment rate Draw a dynamic aggregate demand and aggregate supply graph to illustrate your answer. Make sure that your graph contains LRAS curves, SRAS curves and AD curves for 2017 and for 2018, with and without monetary policy action, as well as equilibrium real GDP and the price level in 2018 with and without monetary policy. (14 marks)