-Consider the above figure. If the aggregate demand fell from AD1 to AD2, our nation would be experiencing
A) an inflationary gap.
B) a recessionary gap.
C) overemployment.
D) rising prices.

Question

-Consider the above figure. If the aggregate demand fell from AD1 to AD2, our nation would be experiencing
A) an inflationary gap. 
B) a recessionary gap. 
C) overemployment. 
D) rising prices.

Quizplus · Accepted Answer

When aggregate demand falls from AD1 to AD2, it indicates that the total demand for goods and services in the economy has decreased. This typically leads to a recessionary gap, where actual output is less than potential output, resulting in higher unemployment and underutilized resources.

-Consider the Above Figure