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The graph below shows the AD-AS diagram for Slovenia.
What type of the GDP gap is observed in Slovenia?
The economy is facing a recessionary gap.
Look at the intersection between AD and SRAS. Is it to the right or to the left of LRAS?
The graph below shows the AD-AS diagram for Spain.
What type of fiscal policy should the government of Spain be implementing to bring the economy to the long-run equilibrium?
The government should implement expansionary fiscal policy.
First, determine if the economy is facing a recessionary or inflationary gap.
The graph below shows the AD-AS diagram for Slovenia.
What type of fiscal policy should the government of Slovenia implement to bring the economy to the long-run equilibrium?
1
First, determine if the economy is facing a recessionary or inflationary gap.
Box 1: Select the best answer
Box 2: Select the best answer
Box 3: Select the best answer