An inflationary expenditure gap is the amount by which:
A) equilibrium GDP falls short of the full-employment GDP.
B) aggregate expenditures exceed any given level of GDP.
C) saving exceeds investment at the full-employment GDP.
D) aggregate expenditures exceed the full-employment level of GDP.

Question

Quizplus · Accepted Answer

An inflationary expenditure gap exists when aggregate expenditures exceed the full-employment level of GDP. This creates upward pressure on prices, leading to inflationary pressure.

An Inflationary Expenditure Gap Is the Amount by Which