Question: LAS2, ADI and SAS2 intersect at Point E2. Thus, the long-run equilibrium is achieved. Price level continues to decrease from P1 to P2. We can

LAS2, ADI and SAS2 intersect at Point E2. Thus, the long-run

LAS2, ADI and SAS2 intersect at Point E2. Thus, the long-run equilibrium is achieved. Price level continues to decrease from P1 to P2. We can see from above figure that real GDP equals potential GDP. Recessionary gap diminishes

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