4, which expenditure level will cause an inflationary gap?

What is inflationary gap? Select one: When aggregate expenditures are greater than the full employment level causing a demand pull-inflation When aggregate expenditures are greater than full employment level causing cost push inflation None of the options are correct It is the gap between a developed nation GDP and an under-developed/ developing nation GDP When aggregate expenditures are inadequate to bring about a full employment level

Describe the differences between recessionary and inflationary gaps.

If there is excess demand for goods and services in the economy at the current price level, then the: If there is excess demand for goods and services in the economy at the current price level, then the:       A.  price level will remain the same     B.  GDP will fall     C.  price level will increase     D.  price level will decrease

K Consider the following diagram, in which the current short-run equilibrium is at point A. a. At point A, the economy has an inflationary gap b. If the marginal propensity to consume equals 0.5, to eliminate the gap, the government should decrease spending by $trillion. (Round your answer to two decimal places.) Price Level 122 118 114 LRAS SRAS A 22 22.8 23.6 Real GDP per Year ($ trillion) AD

1. Look at the figure. If the economy is in equilibrium at E and the government does not intervene, the result will likely be a shift of: Price level P2 g9 P1 LRAS YP Y1 Figure 1 SRAS 2 SRAS 1 AD1 Real GDP