Use the Figure above to answer parts (a) and (b) below. The green line repre...
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Use the Figure above to answer parts (a) and (b) below. The green line represents actual output and the blue line represents the potential.
(a) Which point on the figure (P1, P2, P3, P4) is depicted by the following AD-AS diagram? Where will the other points lie, explain in words. [0.5 + 0.5 mark]
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(b) If the economy is at point P4, then what should the RBA do? Explain in words. [1 mark]
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