If the expenditure schedule must be shifted downward to reach potential GDP, then the economy is experiencing a(n)

Name: If the expenditure schedule must be shifted downward to reach potential GDP, then the economy is experiencing a(n)
Brand: Quizplus
Rating: 4.8 (56 reviews)

Question

Quizplus · Accepted Answer

An inflationary gap occurs when the economy's total spending exceeds its production capacity, leading to upward pressure on prices. Shifting the expenditure schedule downward is a way to reduce this excess demand and bring the economy back to its potential GDP.

If the Expenditure Schedule Must Be Shifted Downward to Reach