Correctly labeled aggregate demand and aggregate supply

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Reference no: EM131085121

Draw a correctly labeled aggregate demand and aggregate supply graph illustrating an economy that was experiencing a recessionary gap.

a. From the perspective of classical economics, model what adjustment is likely to take place in either a product or factor market. Correctly label your graph.

b. After the change in the market that you modeled in part a, make the adjustment to your original graph that shows how classical economists predict the economy will return to long-run equilibrium.

Reference no: EM131085121

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