Sweden has a floating exchange rate . It is considered that the output is lower than the potential and there is disinflation which sometimes leads to deflation.

a. Describe the situation using the IS-LM and AD -AS (SAS MAS) model.

b. What can finance minister do at this point to stimulate the economy? What is the impact of fiscal policy? Analyze using macroeconomic models that you have learned during the jars.

c. What the Riksbank can do in this mode to stimulate the economy? What is the impact of monetary policy? Analyze using macroeconomic models that you have learned during the jars.

d. What will happen if both Pennings and fiscal policies implemented simultaneously. Analyze using macroeconomic models that you have learned during the jars.