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Use the aggregate demand (AD)-aggregate supply(AS) model to show how expansionary fiscal policy could eliminate a recessionary gap. Identify the ways in which each of
Use the aggregate demand (AD)-aggregate supply(AS) model to show how expansionary fiscal policy could eliminate a recessionary gap. Identify the ways in which each of the following determinants would have to change to cause a decrease in aggregate demand and real outputs: consumer wealth, consumer expectations, business taxes, national income in countries abroad, exchange rates in both the short run and the long run.
Explain and support your answer with graphs for both the answers.
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