-Consider the above figure. If the aggregate demand curve rose from AD₁to AD₃, our nation would be experiencing A) an inflationary gap. B) a recessionary gap. C) unemployment. D) falling prices.

Question

Quizplus · Accepted Answer

An increase in aggregate demand from AD1 to AD3 typically indicates an inflationary gap, where the economy is producing beyond its potential output, leading to upward pressure on prices.

-Consider the Above Figure