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The following mechanism has been suggested for the reaction: Identify all intermediates included in this mechanism.
Fiscal Policy
Governmental adjustments to its spending levels and tax rates to monitor and influence a nation's economy.
Inflationary Gaps
A situation in macroeconomics where the demand for goods and services exceeds production due to excessive spending, leading to inflation.
Recessionary Gaps
Situations where the real GDP is lower than the potential GDP due to insufficient aggregate demand, leading to unemployment and underused resources.
Equilibrium GDP
The point at which the aggregate supply and aggregate demand within an economy are equal, indicating a state of economic balance.
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