Suppose that the economy has a recessionary gap. In order to correct this, policymakers would want to use a(n):contractionary policythere is no policy capable of closing a recessionary gapexpansionary policyeither expansionary or contractionary policy can be used to close a recessionary gap Consider the following ADVAS diagram of the macroeconomy, with LRAS shown as the vertical curve, AD as the downward sloping curve and SRAS as the upward sloping curvePlace a point at the current equilibrium Then, use the segment tool to draw a new SRAS curve (parallel and of equal size to the one shown here that shows the long run self-correction that will bring this economy back tolong-run equilibrium Finally, place a point at the new long run and shortlibrum using the point toolSegment- RadiRestPrice LevelReal GDP (billions)Und

A gap arises when there is a disparity between real GDP and potential GDP at full employment. When…

Suppose that the economy has a recessionary gap. In order to correct this, policymakers would want to use a(n): O contractionary policy Othere is no policy capable of closing a recessionary gap expansionary policy O either expansionary or contractionary policy can be used to close a recessionary gapi

Suppose that the economy has a recessionary gap. In order to correct this, policymakers would want to use a(n): O contractionary policy Othere is no policy capable of closing a recessionary gap expansionary policy O either expansionary or contractionary policy can be used to close a recessionary gapi

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Classical Macro Economics And The Self Regulating Economy

Section: Chapter Questions

Problem 6WNG

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