The quantity of real GDP at the short-run macroeconomic equilibrium is $500 bill
ID: 3205398 • Letter: T
Question
The quantity of real GDP at the short-run macroeconomic equilibrium is
$500 billion.
The economy has ______.
A.
an inflationary gap of $ 50 billion
B.
neither a recessionary gap nor an inflationary gap
C.
a recessionary gap of $ 500 billion
D.
a recessionary gap of $50 billion
Price
level
Real GDP demanded
Real GDP supplied
in short run
Real GDP supplied
in long run
(GDP deflator)
(billions of 2007 dollars)
100
700
200
500
105
600
350
500
110
500
500
500
115
400
650
500
Price
level
Real GDP demanded
Real GDP supplied
in short run
Real GDP supplied
in long run
(GDP deflator)
(billions of 2007 dollars)
100
700
200
500
105
600
350
500
110
500
500
500
115
400
650
500
Explanation / Answer
Answer: B
That is, neither inflanationary nor recession
Since the inflationary gap is the GDP exceeds the potention GDP and the recessionary gap is the demand will increase to achieve full employement at a given price level
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