Use the following to answer question 10 Figure Inflationary

Last updated: 12/6/2023

Use the following to answer question 10 Figure Inflationary and Recessionary Gaps Panel a LRAS Price level P3 P P Y Yp Real GDP SRAS AD Price level P3 P P Panel b LRAS Yp Y Real GDP SRAS B indicates that the economy is experiencing an inflationary gap C indicates that the economy is experiencing a recessionary gap D would be associated with considerable unemployment AD 10 Figure Inflationary and Recessionary Gaps In Panel b the level of real GDP represented by X A is potential output for this economy