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P LRAS Yp 1 2 SRAS AD2 AD1 Real GDP Suppose the economy is at point 2. Yp is potential output. a. What is

P LRAS Yp 1 2 SRAS AD2 AD1 Real GDP Suppose the economy is at point 2. Yp is potential output. a. What is the state of the economy? (Boom, recession, just right...) Explain. b. What is the correct monetary policy in this situation? c. Describe what the monetary policy in b will do to the graph above. Include shifts, changes in P, changes in Y.

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The detailed answer for the above question is provided below a What is the state of the economy Boom recession just right Explain The economy is currently in a recession at point 2 Heres why Real GDP ... blur-text-image

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