Question

1. This question has 2 parts a. Draw an AD/AS supply graph that depicts an inflationary...

1. This question has 2 parts

a. Draw an AD/AS supply graph that depicts an inflationary gap. Label this equilibrium as point A

b. Explain how the economy would self-correct from this situation, and demonstrate that on the graph. You may choose to evoke a particular equation in your explanation. Be careful to show the direction of the shift and then label the new equilibrium point as point B.

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