-Using the data in the above table, in the short- run macroeconomic equilibrium, there is
A) an inflationary gap of $1 trillion.
B) a recessionary gap of $1 trillion.
C) an inflationary gap of $2 trillion.
D) a recessionary gap of $2 trillion.

Question

-Using the data in the above table, in the short- run macroeconomic equilibrium, there is
A) an inflationary gap of $1 trillion. 
B) a recessionary gap of $1 trillion. 
C) an inflationary gap of $2 trillion. 
D) a recessionary gap of $2 trillion.

Quizplus · Accepted Answer

In the short-run macroeconomic equilibrium, there is an inflationary gap of $1 trillion. This is because the aggregate expenditure (AE) is greater than the real GDP (Y). The AE is $12 trillion, while the Y is $11 trillion. The difference between the AE and the Y is the inflationary gap.

-Using the Data in the Above Table, in the Short-