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The current level of potential output for our country is estimated at $80billion. Despite this, estimates indicate that our current real GDP is actually at
The current level of potential output for our country is estimated at $80billion. Despite this, estimates indicate that our current real GDP is actually at $70billion.
a)Draw an AD-AS diagram depicting the current economic situationunder standard assumptions.(Do not draw a "shock" that could have led to the current situation.)
b) Calculate the output gap. Is this an inflationary (expansionary) gap or a recessionary gap?
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