Use the following to answer questions . Exhibit: Aggregate Demand and Aggregate Supply and the Great Depression -(Exhibit: Aggregate Demand and Aggregate Supply and the Great Depression) 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? A) expansionary fiscal policies shifted the aggregate demand curve, creating an inflationary gap equal to (Y_n - Y_P). B) expansionary fiscal policies shifted the aggregate demand curve, creating an inflationary gap equal to (Y_m - Y_P). C) expansionary fiscal policies shifted the aggregate demand curve, creating an inflationary gap equal to (Y_m - Y_j). D) expansionary fiscal policies shifted the aggregate demand curve, creating an inflationary gap equal to (Y_n - Y_j).

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Expansionary fiscal policies during World War II increased aggregate demand, moving the economy from point j to a point beyond full employment output (Y_n), creating an inflationary gap.

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