The figure below shows equilibrium in an aggregate demand-aggregate supply model.Which of these statements is true if the economy described by this figure is at point M on SRAS100?

A)The actual price level is lower than expected with a $200 billion expansionary gap.
B)The actual price level is lower than expected with a $200 billion recessionary gap.
C)The actual price level is higher than expected with a $200 billion recessionary gap.
D)The actual price level is higher than expected with a $200 billion expansionary gap.
E)The economy is in equilibrium in the short run and the long run.

Question

The figure below shows equilibrium in an aggregate demand-aggregate supply model.Which of these statements is true if the economy described by this figure is at point M on SRAS100?

A)The actual price level is lower than expected with a $200 billion expansionary gap. 
B)The actual price level is lower than expected with a $200 billion recessionary gap. 
C)The actual price level is higher than expected with a $200 billion recessionary gap. 
D)The actual price level is higher than expected with a $200 billion expansionary gap. 
E)The economy is in equilibrium in the short run and the long run.

Quizplus · Accepted Answer

The Answer of The figure below shows equilibrium in an aggregate demand-aggregate supply model.Which of these statements is true if the economy described by this figure is at point M on SRAS100?

A)The actual price level is lower than expected with a $200 billion expansionary gap. 
B)The actual price level is lower than expected with a $200 billion recessionary gap. 
C)The actual price level is higher than expected with a $200 billion recessionary gap. 
D)The actual price level is higher than expected with a $200 billion expansionary gap. 
E)The economy is in equilibrium in the short run and the long run.

The Figure Below Shows Equilibrium in an Aggregate Demand-Aggregate Supply