1. Use of discretionary policy to stabilize the economyShould policymakers use monetary policy, fiscal policy, or both in an effort to stabilize the economy? The following questions address the issue of howmonetary and fiscal policies affect the economy and the pros and cons of using these tools to lessen economic fluctuations.The following graph shows a hypothetical aggregate demand curve (AD), short-run aggregate supply curve (As), and long-run aggregate supply curve(LRAS) for the economy in February 2023. According to the graph, this economy is in. To bring the economy back to the naturallavel of output, the govemment could usemonatary or fiscal palicy such asShift the appropriate curve on the foliowing graph to iustrate the effects of the policy you chose.150LRASASAD130110AS90AD7060202224282830OUTPUT (Trilions of dollars)Suppose that in February 2023, policymakers undertake the type of policy that is necessary to bring the economy beck to the natural level of output,given the scenario just described. In April 2023, imports decrease, because the United States has implemented trade restrictions on Japanese goods.Because of theassociated with implementing monetary and fiscal policy, the impect of the policymakers' stabilization policywill Ikelyonce the effects of the policy are fully realized.PRICE LEVEL

Demand curve graph showing how the demanded commodity for an item or administration differs with…

1. Use of discretionary policy to stabilize the economy Chould pollcymakers use monetary polley, flscal policy, or both in an effort to stabilize the economy? The following questions eddress the lssue nonetary and fiscal policies affect the economy and the pros and cons of using these tools to lessen econamie fluctuations. The following graph shows a hypothetical aggregate demand curve (AD), short-run aggregate supply curve (AS), and long-run aggregate suppl LRAS) for the economy in February 2023. According to the graph, this economy in in, . To bring the economy back to the n avel of output, the govermment cauld use monatary or fiscal palicy such as Shift the oppropriete curve on the following graph to Mustrate the effects of the poicy you chose. 150 LRAS