Question 2 (this question has two parts, (a) s (Ian (a) Suppose the following table illustrates the values of real and potential GDP and the
Question 2 (this question has two parts, (a) s (Ian (a) Suppose the following table illustrates the values of real and potential GDP and the price level. Potontiol GDP Pool GDP $1 .6 trillion $1.65 trillion Use a dynamic aggregate demand and supply model to illustrate: {i} an appropriate fiscal policy to keep real GDP at its potential level in 2021. and explain the effect of the policy on real GDP. the price level and employment. {ii} an unexpected increase in tax on imported intermediate goods in 2021. Discuss its impact on real GDP. the price level and employment. [1.3 marks] no,\" '1 \"I"
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