Considering what you know about the currently levels of nonfarm payroll and unemployment, in what area of the AD-AS curve is the U.S. economy? Explain why this is the case?
Suppose the economy is at full potential and the federal government institutes a policy of fiscal stimulus to the economy? What is the result in output? What is the result in the price level? (Remember in the short run we can produce beyond potential GDP, but in the long run we will get a price level adjustment.)