-Refer to Table 22-3

-Refer to Table 22-3. The hypothetical information in the table shows what the values for real GDP and the price level will be in 2011 if the Central bank does not use monetary policy:
a. If the Central bank wants to keep real GDP at its potential level in 2011, should it use an expansionary policy or a contractionary policy? Should the trading desk buy T-bills or sell them?
b. Suppose the Central bank's policy is successful in keeping real GDP at its potential level in 2011. State whether each of the following will be higher or lower than if the Central bank had taken no action:
(i) Real GDP
(ii) Full-employment real GDP
(iii) The inflation rate
(iv) The unemployment rate
c. Draw an aggregate demand and aggregate supply graph to illustrate your answer. Be sure that your graph contains LRAS curves for 2010 and 2011; SRAS curves 2010 and 2011; AD curve for 2010 and 2011, with and without monetary policy actions; and equilibrium real GDP and the price level in 2011 with and without policy.