Exhibit 14A-2 Macro AD-AS Model

-In Exhibit 14A-2,the short-run equilibrium depicts an economy:
A) with an inflationary gap.
B) with a recessionary gap.
C) producing at full employment.
D) None of the above answers are correct.

Question

Exhibit 14A-2 Macro AD-AS Model
 
-In Exhibit 14A-2,the short-run equilibrium depicts an economy:
A) with an inflationary gap. 
B) with a recessionary gap. 
C) producing at full employment. 
D) None of the above answers are correct.

Quizplus · Accepted Answer

The short-run equilibrium point in the exhibit shows output below potential GDP (Yp), which indicates a recessionary gap.