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Figure: Fiscal Policy Choices
-(Figure: Fiscal Policy Choices) Look at the figure Fiscal Policy Choices. In panel (a) , the economy is initially at output level Y₁ and there is:

Question

Use the following to answer questions :
Figure: Fiscal Policy Choices

-(Figure: Fiscal Policy Choices) Look at the figure Fiscal Policy Choices. In panel (a) , the economy is initially at output level Y₁ and there is:

Quizplus · Accepted Answer

In panel (a), if the economy is at output level Y1 and it is below the full employment level, it indicates a recessionary gap, where actual output is less than potential output.

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