The image you sent is a general diagram of the Aggregate Demand (AD) and Short-Run Aggregate Supply (SRAS) curves.
I can explain the concepts of recessionary gaps and how they are typically represented on an AD-SRAS diagram.
Recessionary gap:
A recessionary gap occurs when the actual GDP of an economy is lower than its potential GDP. This means the economy is not producing all the goods and services it could be, and there is unemployment above the **natural rate**.
AD-SRAS diagram:
The AD-SRAS diagram is a commonly used tool in macroeconomics to illustrate the relationship between **aggregate demand and aggregate supply**. The **equilibrium point** where these two curves intersect determines the **equilibrium price level** and **equilibrium real GDP**.
Here's how a recessionary gap would typically be represented on an AD-SRAS diagram:
The short-run aggregate supply curve (SRAS)** is typically upward sloping, indicating that a higher price level leads to higher real GDP in the short run.
The *long-run aggregate supply curve (LRAS) is a vertical line at the **natural rate of unemployment.
* If the **equilibrium point** is located **below the LRAS curve** on the **SRAS curve**, it indicates a **recessionary gap**. This means that the **actual real GDP** is **less than the potential GDP**, and the **actual unemployment rate** is **higher than the natural rate**.
The diagram shows two **short-run aggregate supply curves (SRAS1 and SRAS2)** and two **aggregate demand curves (AD1 and AD2).
I hope this explanation clarifies the concepts of recessionary gaps and their representation on AD-SRAS diagrams.
