-Consider the above figure. If the aggregate demand went from AD₂to AD₃,our nation would have gone from A) a recessionary gap to an inflationary gap. B) a recessionary gap to full-employment real GDP. C) an inflationary gap to full-employment GDP. D) full-employment real GDP to an inflationary gap.

Question

Quizplus · Accepted Answer

Aggregate demand went from AD2 to AD3, which means it increased. This would have moved the economy from a recessionary gap (where AD is below full-employment GDP) to an inflationary gap (where AD is above full-employment GDP).

-Consider the Above Figure