Use the figure below to answer the following questions.
Figure 10.3.5
-Refer to Figure 10.3.5.At point B the economy has
A)a recessionary gap with real GDP in excess of potential GDP.
B)a recessionary gap with real GDP less than potential GDP.
C)an inflationary gap with real GDP less than potential GDP.
D)an inflationary gap with real GDP in excess of potential GDP.
E)neither an inflationary gap nor a recessionary gap.

Question

Use the figure below to answer the following questions.
  Figure 10.3.5
-Refer to Figure 10.3.5.At point B the economy has
A)a recessionary gap with real GDP in excess of potential GDP. 
B)a recessionary gap with real GDP less than potential GDP. 
C)an inflationary gap with real GDP less than potential GDP. 
D)an inflationary gap with real GDP in excess of potential GDP. 
E)neither an inflationary gap nor a recessionary gap.

Quizplus · Accepted Answer

At point B, the economy is experiencing an inflationary gap because real GDP is greater than potential GDP, indicating that the economy is producing beyond its sustainable capacity, which can lead to inflation.

Use the Figure Below to Answer the Following Questions