-The economy pictured in the diagram above has a(n)________ gap with a short-run equilibrium combination of inflation and output indicated by point ________.
A) recessionary;A
B) recessionary;B
C) recessionary;C
D) expansionary;A
E) expansionary;C

Question

-The economy pictured in the diagram above has a(n)________ gap with a short-run equilibrium combination of inflation and output indicated by point ________.
A) recessionary;A 
B) recessionary;B 
C) recessionary;C 
D) expansionary;A 
E) expansionary;C

Quizplus · Accepted Answer

The economy is below full employment, so there is a recessionary gap. The short-run equilibrium combination of inflation and output is indicated by point A.

-The Economy Pictured in the Diagram Above Has A(n)________ Gap