Recessionary gap?

Question

Please State whether this is true, false or ambigious and give REASONS PLEASE :)

‘A recessionary gap’ leads to an upward shift in the Short Run Aggregate Supply Curve

(SRAS) when drawn in a diagram with inflation (π) on the vertical axis and output (Y) on

the horizontal axis.

Answer 1

"False" - because of this statement: "...SRAS when drawn in a diagram with inflation (π) on the vertical axis..." - actually vertical axis represents price level but not inflation - though change in this price level gives us inflation. So the rest of original statement are true except this confusion of axis description.

Answer 2

The Statement is both False and ambiguous. False because when a recessionary gap occurs, there is excess supply at current prices and output resulting in lower inflation (rather falling prices/ negative inflation) but lower inflation further reduces aggrgate supply as producers find their profits decline  in the face of fall in demand. So, SRAS cannot shift upwards to the right which would mean in the diagram a higher supply at every inflation rate. The statement is also ambiguous in the sense that it is not clear  why the inflation rate, rather than the price level ius measured on the vertical axis. If indeed SRAS were to depend on inflation rate, supply will adjust along the SRAS- why should it shift. Moreover, in the shortrun, the potential output id most unlikely to change. The analytical purpose of the diagram is not clear.