Use the following figure to answer the questions : Figure9.6: -In Figure 9.6,if full employment occurs at Q_A, then aggregate demand is A)Just right,causing no cyclical unemployment. B)Too great,causing an inflationary gap. C)Too small,causing an inflationary gap. D)Too great, causing a recessionary gap.

Question

Quizplus · Accepted Answer

Full employment occurs at the intersection of the short-run aggregate supply (SAS) curve and the long-run aggregate supply (LAS) curve. In this case, it occurs at Q_A,. If aggregate demand is at this level, it is too great and causing an inflationary gap because it exceeds the economy's level of full employment output.

Use the Following Figure to Answer the Questions : Figure9