-In the above figure, point B depicts
A) an inflationary gap with real GDP in excess of potential GDP.
B) an inflationary gap with real GDP less than potential GDP.
C) a recessionary gap with real GDP in excess of potential GDP.
D) a recessionary gap with real GDP less than potential GDP.

Question

-In the above figure, point B depicts
A) an inflationary gap with real GDP in excess of potential GDP. 
B) an inflationary gap with real GDP less than potential GDP. 
C) a recessionary gap with real GDP in excess of potential GDP. 
D) a recessionary gap with real GDP less than potential GDP.

Quizplus · Accepted Answer

Point B indicates a situation where the economy is producing more than its potential output, leading to an inflationary gap. This is characterized by real GDP being in excess of potential GDP.

-In the Above Figure, Point B Depicts