Explain how you think the economy is doing at this point in time in relation to your particular situation. b) explain where you believe the economy will be in 5 years. Make sure you say how the aggregate demand curve would shift for both optimism and pessimism in the economy. explain how your answer on b) leads to a recessionary gap or an inflationary gap (you need to describe how the aggregate demand and aggregate supply model is affected by the changes above to reduce the recessionary gap or inflationary gap).

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Recessionary Gap A recessionary gap occurs when the economy is operating below its potential level of output This situation typically arises when aggr... View the full answer