Please see attached Picture.

PROBLEMS AND PROJECTS 1. Refer to Exhibit 1 to answer the following questions. EXHIBIT 1 Price level LRAS SRAS, c B AD YF Real GDP a. Is the economy depicted (at point A) in a recession, a boom, or at full employment? b. If no government action was taken, at which point would the economy return to long-run equilibri um with the self-correcting mechanism (changing resource prices affecting SRAS)? Show the curve shifting and note the new equilibrium point in the figure. C. What would a Keynesian suggest be done to government taxes or spending to help the economy out of the recession? Would this be consistent with running a budget deficit, budget surplus, or balanced budget? d. If the policies in part c were adopted, under the Keynesian view, at what point would the economy return to long-run equilibrium? Show the curve shifting and note the new equilibrium point in the figure. e. How do your answers to parts b and d differ? That is, what is different when fiscal policy is used to restore full employment relative to when the economy restores full employment through a self-correction