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Some economist believe if the economy is currently in an inflationary period and equilibrium GDP is larger than the potential GDP the economy will automatically
Some economist believe if the economy is currently in an inflationary period and equilibrium GDP is larger than the potential GDP the economy will automatically stabilize. What are the automatic steps which could take place to get the economy back to potential GDP?
Make sure you tell this story in steps. There are three distinct steps which will bring the economy back to potential GDP.
Graph the changes which occurs to bring the economy back to equilibrium at potential GDP.Start with the economy in equilibrium and an inflationary gap.
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