Problem
In the diagram use aggregate demand and short-run aggregate supply curves to show an economy at a short-run equilibrium, with a $0.5 trillion contractionary gap when potential output is $9.5 trillion. Identify the equilibrium point and price level. Illustrate how fiscal policy can close the contractionary gap.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.