When there is an inflationary gap in the economy,what is occurring to real output in relation to the natural level of output?
A)Real output exceeds the natural level of output.
B)Real output is equal to the natural level of output.
C)Real output may exceed or may be less than the natural level of output.
D)Real output is less than the natural level of output.

Question

Quizplus · Accepted Answer

When there is an inflationary gap, it means that the actual level of output is greater than the economy's natural level of output. This can lead to inflationary pressures and an increase in prices.

When There Is an Inflationary Gap in the Economy,what Is