Exhibit 10-2 -In Exhibit 10-2,an expansionary gap would be represented by the distance A)Y₂ - Y₁ B)Y₃ - Y₁ C)Y₂ - Y₃ D)P₃ - P₁ E)P₂ - P₃

Question

Quizplus · Accepted Answer

An expansionary gap occurs when the actual output (Y) is greater than the potential output (YS). In Exhibit 10-2, Y₃ represents the potential output and Y₁ represents the actual output. Therefore, the distance between them, which is Y₃ - Y₁, is the measure of the expansionary gap. Choice B represents this distance.

Exhibit 10-2 -In Exhibit 10-2,an Expansionary Gap Would Be Represented by the Represented