Price level (GDP price index 150 AS 140- The graph shows the aggregate demand curve and the short-run aggregate supply curve in Artica Potential GDP is initially $300 billion A drought decreases potential GDP to $250 billion Draw the new Potential GDP line. Label it Draw a curve to show what happens if the central bank lowers the federal funds rate Label the curve Draw a point at the new equilibrium price level and real GDP Label it 1. Now starting from the original equilibrium draw a curve to show what happens if the central bank raises the federal funds rate. Label the curve. Draw a point at the new equilibrium price level and real GDP Label it 2. To return the economy to potential GDP the central bank should the federal funds rate 130 130 1204 110- 100- DA raise Blower AD 93- 200