-In the above figure, point B depicts
A) a recessionary gap with real GDP less than potential GDP.
B) an inflationary gap with real GDP in excess of potential GDP.
C) an inflationary gap with real GDP less than potential GDP.
D) a recessionary gap with real GDP in excess of potential GDP.

Question

-In the above figure, point B depicts
A) a recessionary gap with real GDP less than potential GDP. 
B) an inflationary gap with real GDP in excess of potential GDP. 
C) an inflationary gap with real GDP less than potential GDP. 
D) a recessionary gap with real GDP in excess of potential GDP.

Quizplus · Accepted Answer

Real GDP is in excess of potential GDP, indicating an inflationary gap.

-In the Above Figure, Point B Depicts