-Refer to the above figure. If the current level of real GDP is $13 trillion, then the economy is experiencing
A) an inflationary gap.
B) a recessionary gap.
C) a deflationary gap.
D) a fiscal deficit gap.

Question

-Refer to the above figure. If the current level of real GDP is $13 trillion, then the economy is experiencing
A) an inflationary gap. 
B) a recessionary gap. 
C) a deflationary gap. 
D) a fiscal deficit gap.

Quizplus · Accepted Answer

An inflationary gap occurs when the actual GDP exceeds the potential GDP, indicating an economy that is overheating and producing above its sustainable capacity, leading to inflationary pressures.

-Refer to the Above Figure