Question 2

b. Use aggregate demand, aggregate supply, and LRAS to show both a recessionary gap and an inflationary gap. Draw and explain how fiscal policy can be used to close each gap.

c. Draw another set of graphs showing recessionary gap and an inflationary gap. Explain what happens to both graphs in the long-run without government intervention

Questions 3

b. Use the aggregate demand and supply to show the effects of an increase in consumer spending in the short-run and in the long-run. Explain the reason for each shift.

c. Use the aggregate demand and supply to show the effects of an increase in investment spending in the short-run and in the long-run. Explain the reason for each shift.

Can you help me with questions 2 and 3 (B,C for each question)