-The data in the above table show that when the price level is 120, the economy
A) is in a long-run macroeconomic equilibrium.
B) has an inflationary gap.
C) has a recessionary gap.
D) will have falling money wage rates sometime in the future.

Question

-The data in the above table show that when the price level is 120, the economy
A) is in a long-run macroeconomic equilibrium. 
B) has an inflationary gap. 
C) has a recessionary gap. 
D) will have falling money wage rates sometime in the future.

Quizplus · Accepted Answer

A recessionary gap occurs when the actual output is less than the potential output, often leading to unemployment and underutilized resources. If the price level is 120 and the economy is not in long-run equilibrium, it suggests that the economy is operating below its potential, indicating a recessionary gap.

-The Data in the Above Table Show That When the Price