-Refer to the above graph to answer this question.What are the implications if the price level is currently P1?
A)There is a surplus of goods and services and there is a recessionary gap.
B)There is a shortage of goods and services and there is a recessionary gap.
C)There is a surplus of goods and services and there is an inflationary gap.
D)There is a shortage of goods and services and there is an inflationary gap.

Question

-Refer to the above graph to answer this question.What are the implications if the price level is currently P1?
A)There is a surplus of goods and services and there is a recessionary gap. 
B)There is a shortage of goods and services and there is a recessionary gap. 
C)There is a surplus of goods and services and there is an inflationary gap. 
D)There is a shortage of goods and services and there is an inflationary gap.

Quizplus · Accepted Answer

At price level P1, the quantity of goods and services supplied exceeds the quantity demanded, indicating a surplus. This situation typically leads to a recessionary gap, where actual output is less than potential output, reflecting underutilized resources.

-Refer to the Above Graph to Answer This Question