Final answer:
The AD/AS model is used to illustrate an economy operating below full employment, showing a recessionary gap between the current output and potential GDP, and indicating the presence of cyclical unemployment.
Step-by-step explanation:
Assuming a country's economy is operating below full employment, the appropriate diagram to draw is the AD/AS (Aggregate Demand/Aggregate Supply) model. This model illustrates the level of real GDP and the price level in the economy.
In an AD/AS diagram, the AD (Aggregate Demand) curve slopes downward and the AS (Aggregate Supply) curve slopes upwards. The long-run aggregate supply (LRAS) line is vertical and represents the full employment level of GDP, where the economy would be if it were utilizing all its resources efficiently.
If the economy is below full employment, the equilibrium output (as represented by the intersection of AD and AS curves) will be to the left of the LRAS line. This situation is associated with cyclical unemployment and is indicated by a gap between potential GDP and actual GDP, known as a recessionary gap. The distance between the current output and potential GDP on the diagram shows how much the economy is underperforming.