An inflationary gap most likely comes from
A) a negative demand shock.
B) a negative supply shock.
C) a positive demand shock.
D) a positive supply shock.
E) OPEC.

Question

Quizplus · Accepted Answer

An inflationary gap occurs when aggregate demand exceeds potential output (or the full-employment level of output). This can happen due to a positive demand shock, such as an increase in consumer or government spending.

An Inflationary Gap Most Likely Comes from