will need to consider two scenarios in this essay question. For both must describe the problem and solution in the context of the AD/AS model and interpret the effects on inflation and unemployment.

1)Suppose there is a recessionary gap. Explain what this means using the AD/AS model, then describe the fiscal policy and monetary policy measures can address the issue and comment on any drawbacks to this solution.

2)Suppose instead there is an inflationary gap. Explain what this means using the AD/AS model, then describe how fiscal and monetary policy can address the issue and comment on any drawbacks to this solution.

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