The table below shows data for India's economy. Real GDP is measured in millions of rupees.Suppose that full employment occurs when real GDP is 27,000 million rupees. $$\begin{array} { | c | c | c | c | }
\hline & \text { Price level } & \begin{array} { c }
\text { Real GDP } \
\text { supplied in the short } \
\text { run }
\end{array} & \text { Real GDP demanded } \
\hline \text { a } & 114 & 23,501 & 35,898 \
\hline \text { b } & 120 & 25,355 & 32,341 \
\hline \text { c } & 125 & 27,670 & 27,670 \
\hline \text { d } & 131 & 30,366 & 18,569 \
\hline \text { e } & 138 & 33,164 & 15,898 \
\hline
\end{array}$$
The economy is experiencing ________ gap and firms will ________.
A) an inflationary gap; increase production
B) an inflationary gap; increase money wages paid to workers
C) a recessionary gap; increase production
D) a recessionary gap; decrease money wages paid to workers

Question

The table below shows data for India's economy. Real GDP is measured in millions of rupees.Suppose that full employment occurs when real GDP is 27,000 million rupees. $$\begin{array} { | c | c | c | c | } 
\hline & \text { Price level } & \begin{array} { c } 
\text { Real GDP } \
\text { supplied in the short } \
\text { run }
\end{array} & \text { Real GDP demanded } \
\hline \text { a } & 114 & 23,501 & 35,898 \
\hline \text { b } & 120 & 25,355 & 32,341 \
\hline \text { c } & 125 & 27,670 & 27,670 \
\hline \text { d } & 131 & 30,366 & 18,569 \
\hline \text { e } & 138 & 33,164 & 15,898 \
\hline
\end{array}$$
The economy is experiencing ________ gap and firms will ________.
A) an inflationary gap; increase production
B) an inflationary gap; increase money wages paid to workers
C) a recessionary gap; increase production
D) a recessionary gap; decrease money wages paid to workers

Quizplus · Accepted Answer

At point c, the real GDP supplied equals the full employment level of 27,000 million rupees, indicating no gap. However, at other points, the real GDP demanded is less than the full employment level, indicating a recessionary gap. Firms will increase money wages to attract more workers and increase production to meet demand.

The Table Below Shows Data for India's Economy The Economy Is Experiencing ________ Gap and Firms Will ________

The Table Below Shows Data for India's Economy The Economy Is Experiencing Gap and Firms Will