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Components of the ad and as curves

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Consider a situation where current output (real GDP) is currently above potential GDP. What type of fiscal policy will the government use to get to potential GDP? Draw an AD-AS diagram to illustrate this situation (including the initial situation). Explain the figure in some detail. By this, not just explain the changes in the diagram, but also state what components of the AD and AS curves are changing (if any), and in which direction.

Reference no: EM132435622

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