-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

Question

-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

Quizplus · Accepted Answer

The Answer of 
-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

-If the Economy's Potential Output Is $550 Billion and the Equilibrium