se Activities Collaboration Support 4- Macroeconomic Tools Part II - Aggregate E

Question

se Activities Collaboration Support 4- Macroeconomic Tools Part II - Aggregate Expenditures (Keyn and Analysis of Macro Problems (Ch 9) e Left:0:21:17 Kevin Tran: Attempt 2 Price level LRAS GRAS, AD, Real GDP per year At output level Y the econom y is not in equilibrium because it operates with an output gap. ary gap. the economy is in short-run equilibrium and it operates with an inflation the economy is in short-run equilibrium and it operates with a recessionary gap. the economy is not in equilibrium because the unemployment rate is below the natural rate of unemployment. Save ved Question 10 (1 point)

Explanation / Answer

Question 1. Option 3: the economy is in short-run equilibrium and it operates with a recessionary gap.

Explanation: The short-run aggregate supply (SRAS) curve intersects the AD curve when the output level is Yk. So, it is in a short-run equilibrium. Also, the current output is lower than LRAS, which is the potential output. So, the economy is in a recessionary gap.

Question 2. Option 2: The economy depicted in the figure experiences a recessionary gap Yp - Y2.

Explanation: The current output is Y2 as the SRAS intersects AD at this point. Also, the potential output is Yp. So, recessionary gap = potential output - current output = Yp - Y2.

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