-Refer to the graph above to answer this question.What does Figure C illustrate?
A)The situation that existed in the 1930s.
B)Full-employment equilibrium.
C)An inflationary gap situation.
D)A recessionary gap situation.
E)A situation where individual firms cannot be making profits.

Question

-Refer to the graph above to answer this question.What does Figure C illustrate?
A)The situation that existed in the 1930s. 
B)Full-employment equilibrium. 
C)An inflationary gap situation. 
D)A recessionary gap situation. 
E)A situation where individual firms cannot be making profits.

Quizplus · Accepted Answer

Figure C illustrates an inflationary gap situation, which occurs when aggregate demand exceeds aggregate supply at the full employment level, leading to upward pressure on prices.

-Refer to the Graph Above to Answer This Question