The graph shows an economy's aggregate demand and aggregate supply curves and potential GDP. Does this economy have an inflationary gap or a recessionary gap? How does this economy return to full employment? This economy has _______ gap. It returns to full employment as _______. A. an inflationary; the money wage rate rises B. a recessionary; potential GDP increases C. a recessionary; the money wage rate falls D.
The graph shows an economy's aggregate demand and aggregate supply curves and potential GDP. Does this economy have an inflationary gap or a recessionary gap? How does this economy return to full employment? This economy has _______ gap. It returns to full employment as _______. A. an inflationary; the money wage rate rises B. a recessionary; potential GDP increases C. a recessionary; the money wage rate falls D.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
The graph shows an economy's aggregate
Does this economy have an inflationary gap or a recessionary gap? How does this economy return to full employment?
This economy has _______ gap. It returns to full employment as _______.
A.
an inflationary; the money wage rate rises
B.
a recessionary; potential GDP increases
C.
a recessionary; the money wage rate falls
D.
an inflationary; aggregate demand decreases
![Question 8
The graph shows an economy's aggregate demand and aggregate supply
curves and potential GDP.
Price level (GDP price index, 2012=100)
140- Potential GDP
130-
120-
110-
100+
90-
AS
AD
80+
16.0 17.0 18.0 19.0 20.0
Real GDP (trillions of 2012 dollars)
Does this economy have an inflationary gap or a recessionary gap? How does
this economy return to full employment?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6796a369-6a5e-4f1c-ac89-7f8708348db0%2Fe4eddbbd-139c-4cc7-aeb8-71f796ce93e9%2Fzbs75d5_processed.png&w=3840&q=75)
Transcribed Image Text:Question 8
The graph shows an economy's aggregate demand and aggregate supply
curves and potential GDP.
Price level (GDP price index, 2012=100)
140- Potential GDP
130-
120-
110-
100+
90-
AS
AD
80+
16.0 17.0 18.0 19.0 20.0
Real GDP (trillions of 2012 dollars)
Does this economy have an inflationary gap or a recessionary gap? How does
this economy return to full employment?
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