4. This problem is meantto illustrate how the effects of changes in fiscal policy depend uponwhat happens to monetary policy. The solid lines in the figure show and economy in an initial position of equilibrium at full employment with a balanced budget, low interestrates, and no trade deficit, i.e., exports equal imports. The dashed line shows the same economy flowing a decrease in personal income taxes. Assume the decrease in taxes is equal to $1 billion atthe full-employment level of income. Aggregate Aggregate Demand Supply 0. Full Employment Real GDP a. Assume the monetary authority wants to avoid the inflation that would be associated with the increase in the structural deficit. Should the monetary authority engage in an open market purchase or sale? Why