The US government has embarked on its largest stimulus package to fight the COVID 19 economic crisis. One of the worries is that this may overheats the economy. In another word, the huge government spending can give rise to high inflation which is also bad for the economy.

i. Economists are worried that the US economy may overheat in the next few months. Overheating is when the economy reaches the limits of its capacity to meet all the demand from individuals, firms, and government. Explain the economic conditions that will determine if the USA economy will "overheat" in the next 12 months (in the second half of 2021 until 2022). Use diagram to illustrate your answers.