-Using the data in the above table, in the short-run macroeconomic equilibrium, there is
A) an inflationary gap of $1 trillion.
B) an inflationary gap of $2 trillion.
C) a recessionary gap of $1 trillion.
D) a recessionary gap of $2 trillion.

Question

-Using the data in the above table, in the short-run macroeconomic equilibrium, there is
A) an inflationary gap of $1 trillion. 
B) an inflationary gap of $2 trillion. 
C) a recessionary gap of $1 trillion. 
D) a recessionary gap of $2 trillion.

Quizplus · Accepted Answer

In the short-run macroeconomic equilibrium, there is an inflationary gap of $1 trillion. This is because the aggregate demand (AD) is greater than the aggregate supply (AS), which means that there is more money chasing fewer goods and services. This leads to higher prices and inflation.

-Using the Data in the Above Table, in the Short-Run