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In Japan potential GDP is 600 trillion yen and table demonstrate aggregate demand and short run aggregate supply schedules.
Price levelReal GDP demandedReal GDP Supplied in the short run
75 600 40085 550 45095 500 500105 450 550115 400 600125 350 650135 300 700
a. Create a graph of the aggregate demand curve and the short-run aggregate supply curve.
b. Find the short-run equilibrium real GDP and price level?
c. Does Japan have an inflationary gap or a recessionary gap and what is its magnitude?
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