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Answer to Question #242252 in Macroeconomics for Danu
Question #242252
suppose that an economy is undergoing a recession because of a fall in AD using an aggregate demand aggregate supply (AD-AS) diagram, depict the situation of the economy and (b) if policy makers take no action, how will the economy evolve over time? explain your answer using an AD-AS diagram
Expert's answer
During a recession, people reduce their consumption for goods and services thereby shifting the AD curve to the left.
When left unattended, the recessions tend to correct itself.
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