Please help The economy depicted in the graph is:abPrice Level(P)Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.experiencing a monetary gap.Pexperiencing an inflationary gap.с experiencing a recessionary gap.PEin equilibrium at full employment.LRASI SRAS*ADQE QN Real GDP (Q)

Answered: The economy depicted in the graph is:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please help

The economy depicted in the graph is:
a
b
Price Level
(P)
Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
experiencing a monetary gap.
P
experiencing an inflationary gap.
с experiencing a recessionary gap.
PE
in equilibrium at full employment.
LRASI SRAS
*
AD
QE QN Real GDP (Q)

Expert Solution

Step 1

The above graph shows the AD/AS model, where Aggregate demand is below the Long run Aggregate supply. This reflect the situation of recessionary gap, where real output is below the potential output in the economy. A inflationary gap takes place when AD is above LRAS given rise to real output above potential output

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