(Solved): Free-Response Review Questions Draw an aggregate supply/aggregate demand diagram that portrays a rec ...

Free-Response Review Questions Draw an aggregate supply/aggregate demand diagram that portrays a recessionary gap. Be sure to label the axes of your diagram and the aggregate demand curve, the short-run aggregate supply curve, and the long-run aggregate supply curve. Should government spending be increased or decreased to close a recessionary gap? Show how this change in government spending is reflected in the diagram drawn for question 1. If the government does nothing in the face of a recessionary gap, would wages and resources prices be expected to increase or decrease in the long run? Explain. Which curve of the aggregate supply/aggregate demand model would shift which way once wages and resource prices changed?