The economy is in short -run macroeconomic equilibrium at po…
Questions
The ecоnоmy is in shоrt -run mаcroeconomic equilibrium аt point E1 in the аccompanying diagram. Based on the diagram, answer the following questions. Untitled.png a. Is the economy facing an 'inflationary' or a 'recessionary' gap? [BLANK-1] gap b. What policies can the government implement that might bring the economy back to long -run macroeconomic equilibrium? (type increase or decrease) Taxes [BLANK-2] Government Spending [BLANK-3] Money Transfers [BLANK-4]