Macroeconomics
Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 9, Problem 6QP
To determine

Explain the recessionary gap, inflationary gap, and the long run equilibrium.

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Why does the effect of a given increase in aggregate demand have a larger effect on real output in the short run, the more excess capacity exists in the economy?
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