The figure below shows the price level, real GDP, and the potential output for an economy. According to those who favor a passive approach to policy, once the expansionary gap is eliminated, the economy will end up at:

A) point A.
B) point B.
C) point C.
D) a point to the right of point A.
E) a point below C.

Question

The figure below shows the price level, real GDP, and the potential output for an economy. According to those who favor a passive approach to policy, once the expansionary gap is eliminated, the economy will end up at:

A) point A. 
B) point B. 
C) point C. 
D) a point to the right of point A. 
E) a point below C.

Quizplus · Accepted Answer

The Answer of The figure below shows the price level, real GDP, and the potential output for an economy. According to those who favor a passive approach to policy, once the expansionary gap is eliminated, the economy will end up at:

A) point A. 
B) point B. 
C) point C. 
D) a point to the right of point A. 
E) a point below C.

The Figure Below Shows the Price Level, Real GDP, and the Potential