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full employment output occurs at QA, then the aggregate demand is

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Measuring A Nation's Income

Section15.3: The Components Of Gdp

Problem 3QQ

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Question

Refer to Fig 9.6. If full employment output occurs at Q_A, then the aggregate demand is

A).too small, causing inflationary gap.

B) too great, causing recessionary gap.

C) too great, causing inflationary gap.

D) just right, causing no cyclical unemployment.

AS
- AD
+
Qc
QA
Real GDP
Figure 9.6
Price Level

Definition Definition State in which an individual is without work, despite actively seeking employment opportunities. The unemployment rate refers to the percentage of the workforce that is currently unemployed. Unemployment is one of the key indicators of the conditions prevailing in an economy. It is therefore considered a barometer that points out the condition of an economy.

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