Which of the following is evidence of an inflationary gap?
A)very long lines at employment agencies
B)very short waiting times for product delivery
C)very low sales figures
D)very long search times for people looking for jobs
E)very low unemployment rates

Question

Which of the following is evidence of an inflationary gap?
A)very long lines at employment agencies 
B)very short waiting times for product delivery 
C)very low sales figures 
D)very long search times for people looking for jobs 
E)very low unemployment rates

Quizplus · Accepted Answer

An inflationary gap occurs when the economy is producing above its potential, which leads to lower unemployment rates and higher inflation. Therefore, very low unemployment rates would be evidence of an inflationary gap. The other options (A, B, C, and D) do not necessarily indicate an inflationary gap.

Which of the Following Is Evidence of an Inflationary Gap