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Q.12 (10 points) The following table presents the macro-economic data of a country in 2018 and 2019 respectively. 2018 2019 Real GDP Potential Real GDP

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Q.12 (10 points) The following table presents the macro-economic data of a country in 2018 and 2019 respectively. 2018 2019 Real GDP Potential Real GDP (:1) (5 points) Based on the LRASSRAS-AD model, propose factor (3) that must have changed to induce the change of the macro-variables from 2018 to 2019 stated in the table above. For each factor, you should state the factor clearly, whether it increases or decreases and which curve (LRAS, SRAS, AD) will shift and the direction of the shift of the curve. (b) (5 points) In 2019, propose a macro-economic policy that can raise the real GDP of the country to its long-run potential level (i.e., $1200). State clearly the policy, which curve (LRAS, SRAS, AD) will shift and the direction of the shift. Explain carefully how the policy you propose will lead to the shift of the curve(s) in the direction you have stated

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