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a.Assume the economy faces a huge demand shock that lands it in the upward sloping segment of Aggregate Demand curve. Depict this situation on the

a.Assume the economy faces a huge demand shock that lands it in the upward sloping segment of Aggregate Demand curve. Depict this situation on the diagram for AD-AS model.

b.How can policy makers respond to this shock to help alleviate the recessionary output gap. Give a specific example and show the effect of your recommended policy on your diagram.

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