Use the following to answer questions .
Exhibit: AD-AS and the Inflation-Unemployment Cycle
-(Exhibit: AD-AS and the Inflation-Unemployment Cycle) At point 4, the economy is experiencing
A) an inflationary gap.
B) a recessionary gap.
C) long-run equilibrium.
D) a recovery.

Question

Use the following to answer questions .
Exhibit: AD-AS and the Inflation-Unemployment Cycle 
-(Exhibit: AD-AS and the Inflation-Unemployment Cycle) At point 4, the economy is experiencing
A) an inflationary gap. 
B) a recessionary gap. 
C) long-run equilibrium. 
D) a recovery.

Quizplus · Accepted Answer

Point 4 is to the left of the long-run equilibrium, indicating that there is a recessionary gap, where actual output is below the potential output.

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