n the 1990s, Japan suffered an economic slowdown due to a plunge in stock and land values. The Japanese government relied on large-scaled government spending on infrastructure to mitigate an economic impact.

a. Explain why a fall in the values of stock and land led to an economic slowdown in Japan.

b. Would economic slowdown result in an inflationary gap or a recessionary gap in Japanese economy?

c. Use a diagram of AD-AS model to show the gap described in (b).

d. Was Japanese government spending classified as contractionary or expansionary fiscal policy. Explain how this spending infrastructure could mitigate the economic slowdown.

e. Assume the Japanese government's spending policy was successful, show an economic impact on aggregate price and real GDP from this policy on the diagram drawn in (c).