Suppose that you are a member of the Council of Economic Advisers. The president has asked you to do a statement on the question, "What is the proper fiscal policy for the next twelve months?" Prepare such a statement, indicating (a) the current state of the economy (that is, the unemployment rate, growth in real income, and rate of inflation) and (b) your fiscal policy suggestions. Should the budge be in balance? Explain the reasoning behind your suggestions.

(Use your GDP knowledge)