N4

The current state of a hypothetical economy:

Unemployment rate = 10%

Inflation rate = 2%

Significant National Debt

Moderate economic growth as measured by the Real GDP

A. Based on this data, Describe the current state of this economy.

B. What is the most important immidiate problem in this economy?

C. Based on this data, what fiscal policies would the President and the Congress take?

D. Explain the effect of these policies on the equilibrium real GDP and price level.

E. Explain the effect of these policies on Government budget?