Examine the figure below and use it to answer questions 1-4:

https://indianaonline.instructure.com/courses/1309/files/983686/preview

1. Observing the figure above, what is the status of the U.S. economy? Be sure to also include price level, output, and employment in your explanation.

2. How could official entities use fiscal and monetary policy to correct the situation? Be sure to include all possibilities, the functions and tools, and explain the effects.

3. Regarding your answer to number 2, what will happen to the value of the dollar if the government only uses fiscal policy. What will happen to the value of the dollar is monetary policy is used?

4. Choose one of your answers in number 3, and explain how that will affect net exports of U.S. goods and explain how that affects the original intent of the policy.