By early 2008, most economists believed we were heading towards recession. Congress and the President passed an Economic Stimulus Package (Expansionary Fiscal Policy) and the Federal Reserve cut interest rates (Expansionary Monetary Policy).
Explain what was happening to the economy in terms of the AS/AD model, including what would need to happen to bring us out of the "recessionary gap". In other words, using the AS/AD model as a starting point, explain the economic situation of 2008.