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Figure Policy Alternatives Price level P3 P P Panel a LRAS SRAS AD Y Yp...

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Figure Policy Alternatives Price level P3 P P Panel a LRAS SRAS AD Y Yp Y Real GDP A an inflationary gap B a recessionary gap C no gap SRAS Price level P3 P P Panel b LRAS SRAS Y Yp Y2 AD Real GDP AD2 30 Figure Policy Alternatives In Panel a suppose that the initial equilibrium is at real GDP level Y and price level P At real GDP level Y there is

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