Use the following to answer questions: -(Figure: Inflationary and Recessionary Gaps) Refer to Figure: Inflationary and Recessionary Gaps. At E₂, the economy: A) is in a long-run equilibrium. B) has an inflationary gap. C) has a recessionary gap. D) has high unemployment.

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Quizplus · Accepted Answer

At the point E₂, the aggregate demand (AD) curve intersects with the long-run aggregate supply (LRAS) curve, indicating that the economy is in a long-run equilibrium with no inflationary or recessionary gaps. Therefore, the correct answer is A.

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