Figure 33-8

-In Figure 33-8, which of the following movements reflects the closing of an inflationary gap through the economy's self-correcting mechanism?
A)A to B
B)A to C
C)C to E
D)D to E

Question

Figure 33-8
​ 
-In Figure 33-8, which of the following movements reflects the closing of an inflationary gap through the economy's self-correcting mechanism?
A)A to B 
B)A to C 
C)C to E 
D)D to E

Quizplus · Accepted Answer

The movement from A to B reflects the closing of an inflationary gap through the economy's self-correcting mechanism. As the price level rises from A to B, the quantity of goods and services demanded decreases, while the quantity of goods and services supplied increases. This decrease in demand and increase in supply leads to a decrease in the price level, which closes the inflationary gap.

Figure 33-8 ​

Figure 33-8