The economy is in a recession with high unemployment and low output.
A) Draw a graph of aggregate demand and aggregate supply to illustrate the current situation. Be sure to include the aggregate demand curve, the short run aggregate supply curve and the long-run aggregate supply curve
B) Identify an open-market operations that would restore the economy to its natural rate
C) Draw a graph of the money market to illustrate the effect of this open-market operation. SHow the resulting change in the intrest rate
D) Draw a graph similar to the one in part (A) to who the effect of the open-marekt operation on output to the prive level. Explain in words why the policy has the effect that you have shown in the graph