Following President Bidens inaugural speech, including a detained strategy to produce and distribute vaccines against the coronavirus, in February 2021, the Congressional Budget Office revised it 1- year projections for economic growth. According to these new protections, the economic expansion that begin in mid-2020 will continue. Real GDP is projected to return to its prepandemic level in mid-2021 and to surpass potential output in 2026.

a. Assuming other prices are allowed to change, what would be the short run impact of improved expectations on national income and the general price? illustrate your answer using the aggregate demand-aggregate supply diagram. Then, explain how prices changes affect the income-expenditure equilibrium output, but you do not need to illustrate the change to the income-expenditure diagram, only write your explanation.

b. what will be the effect of improved expectations on the long-run equilibrium price level and output level? illustrate your answer using the aggregate demand-aggregate supply diagram. Explain the processes by which the long-run equilibrium aggregate output and price level are reached.