Assume that the United States economy is currently operatingatabovefull-employment level of real gross domestic product with a balanced budget.

(a) Draw a correctly labeled graph of aggregate demand, short-run aggregate supply, and long-run aggregate supply, and show each of the following in the United States.

(i) Current output and price level, labeled as Y₁and PL₁

(ii)Full-employment output, labeled asY_f

(c) If the marginal propensity to consume is equal to 0.75, calculate themaximumpossible change in real gross domestic product that could result from the $50 billiondecrease in government spending.

(d) Using the information from part (c) show this change on your graph in part (a) and label the new output as Y₂ and PL₂.