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Figure: Short-Run Equilibrium
-(Figure: Short-Run Equilibrium) Look at the figure Short-Run Equilibrium. It reflects a short-run inflationary gap. According to the labeling on the graph, the size of the inflationary gap is equal to:

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Figure: Short-Run Equilibrium

-(Figure: Short-Run Equilibrium) Look at the figure Short-Run Equilibrium. It reflects a short-run inflationary gap. According to the labeling on the graph, the size of the inflationary gap is equal to:

Quizplus · Accepted Answer

The inflationary gap is the difference between the actual price level (P₁) and the equilibrium price level (P₀). In this case, the inflationary gap is equal to P₂ - P₁.

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