Assignment:
Question 1: Fiscal Policy
A. Gather Data: Using the Federal Reserve Economic Database, determine real GDP (series GDPC1) and potential real GDP (series GDPPOT) for Quarter 4 of 2009.
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Real GDP
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Potential real GDP
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Question 2: Side-Effects of Fiscal Policy
A. In the graph on left, draw the new curve or curves based on the fiscal policy that you suggested in the first question.
B. In the graph on the right, draw the new curve or curves that would result from the government making no changes to fiscal policy (i.e. the 'natural mechanism').
C. Which scenario has the higher resulting real GDP? Which scenario has the higher resulting price level?