Suppose an economy has an upward-sloping AS curve and an inflationary gap equal to $10 billion.If AD shifts to the left by $10 billion,
A)Real output will fall by less than $10 billion.
B)Real output will fall by $10 billion.
C)The inflationary gap will be eliminated.
D)A recessionary gap will be createD.The AD curve shifts to the left,but the new macro equilibrium will occur at a lower price level.So there will still be an inflationary GDP gap,though it will be smaller.

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The Answer of Suppose an economy has an upward-sloping AS curve and an inflationary gap equal to $10 billion.If AD shifts to the left by $10 billion,
A)Real output will fall by less than $10 billion.
B)Real output will fall by $10 billion.
C)The inflationary gap will be eliminated.
D)A recessionary gap will be createD.The AD curve shifts to the left,but the new macro equilibrium will occur at a lower price level.So there will still be an inflationary GDP gap,though it will be smaller.

Suppose an Economy Has an Upward-Sloping AS Curve and an Inflationary