
-If the economy's potential output is $550 billion and the equilibrium interest rate is 7 percent:
A) there is an inflationary gap of $50 billion
B) the monetary authorities should increase the money supply from $50 billion to $110 billion
C) the economy is operating at its potential output
D) there is a recessionary gap of $200 billion
E) there is an inflationary gap of $200 billion
Correct Answer:
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