If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP more than potential GDP,there is
A)a recessionary gap.
B)an inflationary gap.
C)a falling price level.
D)a rising real GDP.
E)a below-full employment equilibrium.

Question

Quizplus · Accepted Answer

An intersection of the aggregate demand curve and the aggregate supply curve at a level of real GDP more than potential GDP indicates that the economy is producing beyond its long-run capacity, which leads to upward pressure on prices and an inflationary gap.

If the Aggregate Demand Curve and the Aggregate Supply Curve