Use the aggregate expenditures model to show how government fiscal policy could eliminate either a recessionary expenditure gap or an inflationary expenditure gap (Figure 28.7).
Recessionary and inflfl ationary expenditure gaps

Explain how equal-size increases in G and T could eliminate a recessionary gap and how equal-size decreases in G and T could eliminate an inflationary gap.

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AE2 AEo AF AEo 530 e530 S510 510 Recessionary expenditure gap ะเ5 billion Inflationary expenditure gap $5 billion 490 490 Full employment Full 45° 45v employment 0 490 510 530 0 490 510 530 Real GDP Real GDP Recessionary expenditure gap Inflationary expenditure gap