Reference no: EM131766993

Graph Problem  Use the graph to answer questions below.

1. If the above graph is a depiction of the state of the economy as it is now, is the economy in a recession or inflation? _____________________________(Recesion / Inflation ?)

2. Given the state of the economy shown in the above graph, what fiscal policies could the Government use to combat the problems in the economy? 

If the government went ahead and implemented these policies;

- What would happen to prices?    _____________

- What would happen to employment?______________

- What would happen to the government budget?______________