If the economy is at full employment and both the AS curve and the LAS curve shift right,why might the economy experience a recessionary gap?
A)Because prices are inflexible downwards.
B)Because the LAS curve will always shift more than the AS curve.
C)Because a new equilibrium price level may be established that is above the price level needed to maintain full employment
D)Because a new equilibrium price level may be established that is below the price level needed to maintain full employment
E)Because there is no reason to assume that the aggregate demand curve will shift.

Question

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The Answer of If the economy is at full employment and both the AS curve and the LAS curve shift right,why might the economy experience a recessionary gap?
A)Because prices are inflexible downwards.
B)Because the LAS curve will always shift more than the AS curve.
C)Because a new equilibrium price level may be established that is above the price level needed to maintain full employment
D)Because a new equilibrium price level may be established that is below the price level needed to maintain full employment
E)Because there is no reason to assume that the aggregate demand curve will shift.

If the Economy Is at Full Employment and Both the AS Curve