In Figure 10.1,suppose this economy is in equilibrium at point a and Q_F represents full employment output.Which of the following statements is true? A)The economy is experiencing serious inflation problems. B)There is no GDP gap. C)Inventories are accumulating. D)Inventories are falling.

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Quizplus · Accepted Answer

At point a, the economy is at full employment output. This means that there is no GDP gap, indicating that the economy is producing at its potential output level. Therefore, option B is accurate. Option A is incorrect as there is no evidence of inflation problems in the economy. Option C and D are also incorrect as there is no information about inventories in the figure provided.