The Economy of Dotsville is in a recession.

A) Using a correctly labeled aggregate demand and aggregate supply graph, show the equilibrium price level as P1 and real gross domestic product as Y1.

B) The president is considering using fiscal policy to end the recession. State two policies the president should consider. Identify and explain which policy will have a greater impact in meeting the president's goal.

C) The president and congress cannot agree on a fiscal policy. As a result no policy action is taken. Show (on the graph above) and explain what will happen in the long run.

D) As result of your answer above, identify what will happen to the following in Dotsville

i) Imports

ii) Exports