In the space provided immediately below, draw an AD/ASdiagram to illustrate an recessionary gap. Then modify the diagram toillustrate the use of stabilization policy to eliminate the recessionary gap.What is the term used to describe stabilization polices used to closerecessionary gaps? What policy measures could be used? Which institutionwould be responsible for which policy? How does the outcome differ fromallowing the adjustment process to operate? What would be an argument forusing stabilization policy rather than allowing the adjustment process tooperate? Your answer should include both a diagram and an explanation ofit. The diagram should have clear and complete labels and should make use ofthe axes provided below. The explanation should consist of completesentences.
