-In the above figure, the inflationary gap when AD₂ is the aggregate demand curve equals A) the difference between 110 and 100. B) the difference between $18.5 trillion and $18.0 trillion. C) LAS minus SAS at a price level of 100. D) AD₁.

Question

Quizplus · Accepted Answer

The inflationary gap is defined as the amount by which the actual aggregate demand exceeds the aggregate supply at the full employment level. In this context, the correct answer involves comparing the actual aggregate demand ($18.5 trillion) with the aggregate supply at full employment ($18.0 trillion), which gives the inflationary gap as the difference between these two values.

-In the Above Figure, the Inflationary Gap When AD2 Is

-In the Above Figure, the Inflationary Gap When AD₂ Is