Figure 1 shows the aggregate demand curve AD and the shortrun
aggregate supply curve AS, in the economy of Freezone. Potential
GDP is 300 Billion.
What are the price level and Real GDP? Does Freezone have
unemployment problem or an inflation problem? why ?
What happens in freezone if the central bank conducts an open
market sale of securities? How will the interest rate change? Do
you recomend that the central bank conduct an open market sale of