Exhibit 10.4

-Refer to Exhibit 10.4, which shows an aggregate demand-aggregate supply model. Which of these statements is true if the economy is at point M on SRAS₁₀₀?
A) The actual price level is lower than expected, with a $200 billion expansionary gap.
B) The actual price level is lower than expected, with a $200 billion recessionary gap.
C) The actual price level is higher than expected, with a $200 billion recessionary gap.
D) The actual price level is higher than expected, with a $200 billion expansionary gap.
E) The economy is in equilibrium in the short run and the long run.

Question

Exhibit 10.4
 
-Refer to Exhibit 10.4, which shows an aggregate demand-aggregate supply model. Which of these statements is true if the economy is at point M on SRAS₁₀₀?
A) The actual price level is lower than expected, with a $200 billion expansionary gap. 
B) The actual price level is lower than expected, with a $200 billion recessionary gap. 
C) The actual price level is higher than expected, with a $200 billion recessionary gap. 
D) The actual price level is higher than expected, with a $200 billion expansionary gap. 
E) The economy is in equilibrium in the short run and the long run.

Quizplus · Accepted Answer

The Answer of Exhibit 10.4
 
-Refer to Exhibit 10.4, which shows an aggregate demand-aggregate supply model. Which of these statements is true if the economy is at point M on SRAS₁₀₀?
A) The actual price level is lower than expected, with a $200 billion expansionary gap. 
B) The actual price level is lower than expected, with a $200 billion recessionary gap. 
C) The actual price level is higher than expected, with a $200 billion recessionary gap. 
D) The actual price level is higher than expected, with a $200 billion expansionary gap. 
E) The economy is in equilibrium in the short run and the long run.

Exhibit 10.4 -Refer to Exhibit 10.4, Which Shows an Aggregate Demand-Aggregate Supply