An inflationary gap is the amount by which aggregate expenditures ____ the amount required to achieve full-employment equilibrium GDP.
A) exceed
B) equal
C) fall short of
D) are greater than

Question

Quizplus · Accepted Answer

An inflationary gap occurs when aggregate expenditures exceed the level needed for full-employment equilibrium GDP, leading to upward pressure on prices.

An Inflationary Gap Is the Amount by Which Aggregate Expenditures