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Asked Dec 9, 2019
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Step 1

a. The economy starts at point Y at which it is producing at its full potential. Recession occurs at the point W because there is under productivity at this point and the economy is not producing up to its full potential.

Step 2

b. When the aggregate demand increeases then it is shown by the rightward shift in aggregate demand. The economy is initially at point Y and after the shi...

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