Figure 17-1
-Refer to Figure 17-1. Suppose the U.S. economy is at point j. With the onset of World War II, expansionary fiscal policies forced by the war pushed into an inflationary gap. Which of the following best illustrates this event?

Question

Figure 17-1 
-Refer to Figure 17-1. Suppose the U.S. economy is at point j. With the onset of World War II, expansionary fiscal policies forced by the war pushed into an inflationary gap. Which of the following best illustrates this event?

Quizplus · Accepted Answer

Expansionary fiscal policies would shift the aggregate demand curve to the right, creating an inflationary gap where actual output (Y_n) exceeds potential output (Y_P).

Figure 17-1 -Refer to Figure 17-1. Suppose the U.S. Economy Is at Economy