Exhibit 10-12
-Consider Exhibit 10-12.Aggregate demand is represented by AD₀ and the aggregate supply is AS₁₀₀ since the expected price level is 100.Which of the following identifies the size of the expansionary gap?

Question

Exhibit 10-12 Exhibit 10-12 -Consider Exhibit 10-12.Aggregate demand is represented by AD<sub>0</sub> and the aggregate supply is AS<sub>100</sub> since the expected price level is 100.Which of the following identifies the size of the expansionary gap? A) FB B) GB C) JB D) EA E) HI

Exhibit 10-12 -Consider Exhibit 10-12.Aggregate demand is represented by AD<sub>0</sub> and the aggregate supply is AS<sub>100</sub> since the expected price level is 100.Which of the following identifies the size of the expansionary gap? A) FB B) GB C) JB D) EA E) HI

-Consider Exhibit 10-12.Aggregate demand is represented by AD₀ and the aggregate supply is AS₁₀₀ since the expected price level is 100.Which of the following identifies the size of the expansionary gap?

Quizplus · Accepted Answer

The expansionary gap occurs when aggregate demand exceeds aggregate supply at the expected price level of 100. The vertical distance between the aggregate demand curve (AD₀) and the aggregate supply curve (AS₁₀₀) at the expected price level of 100 is the expansionary gap. This is best seen between point J and point B. Therefore, the correct answer is JB.

Exhibit 10-12 -Consider Exhibit 10-12.Aggregate Demand Is Represented by AD0 and the AD0

Exhibit 10-12 -Consider Exhibit 10-12.Aggregate Demand Is Represented by AD₀ and the AD₀