In the figure at right, if the relevant aggregate demand curve is AD2, what type of gap exists and how large is it? A. inflationary gap of $500 billion B. recessionary gap of $500 billion C. recessionary gap of $1 trillion D. inflationary gap of $1 trillion
In the figure at right, if the relevant aggregate demand curve is AD2, what type of gap exists and how large is it? A. inflationary gap of $500 billion B. recessionary gap of $500 billion C. recessionary gap of $1 trillion D. inflationary gap of $1 trillion
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
In the figure at right, if the relevant aggregate demand curve is
AD2,
what type of gap exists and how large is it?inflationary gap of $500 billion
recessionary gap of $500 billion
recessionary gap of $1 trillion
inflationary gap of $1 trillion
Transcribed Image Text:LRAS
SRAS
130
120
AD,
AD2
11.5 12
Real GDP per Year ($ trillions)
Price Level
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