-An inflationary gap means that short- run macroeconomic equilibrium GDP
A) is more than full- employment GDP.
B) is less than full- employment GDP.
C) equals full- employment GDP.
D) may be less than, more than, or the same as full- employment GDP depending on the level of potential GDP.

Question

-An inflationary gap means that short- run macroeconomic equilibrium GDP
A) is more than full- employment GDP. 
B) is less than full- employment GDP. 
C) equals full- employment GDP. 
D) may be less than, more than, or the same as full- employment GDP depending on the level of potential GDP.

Quizplus · Accepted Answer

An inflationary gap occurs when the actual GDP in the short-run exceeds the full-employment GDP, indicating that the economy is producing beyond its sustainable capacity, often leading to upward pressure on prices.

-An Inflationary Gap Means That Short- Run Macroeconomic Equilibrium GDP