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Using the AS/AD model, explain what will happen next and suggest a monetary and/ora fiscal policy to adjust outputand analyse the effect of this policy on the pricelevel and employment.

Posted on April 14, 2021 by Shady

Part 1 (30%) Consider an economy where the level ofproduction (Y) is not at thenatural level (Yn), that is, an economy in which Y≠Yn.Using the AS/AD model, explain what will happen next and suggest a monetary and/ora fiscal policy to adjust outputand analyse the effect of this policy on the pricelevel and employment.

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