1. Assume the difference between the short-run and long-run equilibrium output is worth $36 billion, and the marginal propensity to consume is 0.75. Calculate one specific and effective fiscal policy action the government could take.
2. What would be the short-run impact of the government's action on the economy's real output?
3. What would be the short-run impact of the government's action on the potential output of the economy?
4. Will the long-run equilibrium price level if the government intervenes be less than, equal to, or greater than the long-run equilibrium price level without intervention?