Assume an economy is currently operating at point A and answer the following questions.

a) What can we determine from the knowing the position of point A to understand how the product market of this economy is performing? Explain the reasoning for your answer.

b) What can we determine from knowing the position of point A to understand about the current state of the money market? Explain the reasoning for your answer.

c) What key policy recommendations would you make for an economy like this one that is currently operating at point A? Justify why you believe this is appropriate policy.

d) Illustrate using the IS-LM model how the policy recommendations you provide in c) will impact the economy. On your diagram indicate the new point that the policy takes the economy to and label this as point diagram shown including the impact of policy recommendations given in c) being shown and new point B correctly identified (diagram shown including the impact of policy recommendations given in c) being shown and new point B correctly identified)

\f