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The graph below shows the AD-AS diagram for Norway.

What type of the GDP gap is observed in Norway?

 

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The graph below shows the AD-AS diagram for Brazil.

What type of fiscal policy should the government of Brazil be implementing to bring the economy to the long-run equilibrium?

 

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The graph below shows the AD-AS diagram for the US.

How big is the recessionary gap?

 


The graph below shows the AD-AS diagram for Mexico.

Suppose that the government expenditure multiplier is equal to 7.

By how much should the government increase government expenditures (G) in order to close this recessionary gap?

 

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The graph below shows the AD-AS diagram for Brazil.

How big is the inflationary gap?

 


The graph below shows the AD-AS diagram for the US.

Suppose that the government expenditure multiplier is equal to 1.

By how much should the government decrease government expenditures (G) in order to close this inflationary gap?

 

Hint